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CAUSES THAT COMPLICATE THE RECOVERY OF BITCOIN AND OTHER CRYPTOCURRENCIES

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CAUSES THAT COMPLICATE THE RECOVERY OF BITCOIN AND OTHER CRYPTOCURRENCIES

Bitcoin, over the months, has shown a bearish trend that it has tried to keep in a relatively conservative margin, but this situation is...

Bitcoin, over the months, has shown a bearish trend that it has tried to keep in a relatively conservative margin, but this situation is already out of the hands of digital assets; the trends they have developed can be seen, click here.

The fall evidenced this Saturday represents a notable concern in crypto investors since they have put their trust and capital in these instruments considered valuable assets.

The situation looks quite critical, only those cryptocurrency specialists usually predict a change of scenery and digital asset trends.

Reasons why Bitcoin continues to drop

It could be said that it is one of the most critical stages that Bitcoin has gone through; as a result of having evolved positively during the year 2021, everything seemed to point to a growth stage between lows and highs, but always with a tendency to improve your rating.

It has been a rather turbulent year as far as the financial market is concerned; the expectation regarding the evolution of cryptocurrencies was relatively high at the beginning of the year; nobody expected that the downward trend would enter the scene and be parked for so long.

Bitcoin has represented an investment proposal for large corporations, which have begun to adopt an alert position in the face of changes in digital currencies.

The inflationary data that the critical and financial situation in the United States is throwing is the main element that is notably affecting the performance of the valuation of cryptocurrencies.

The decisions of the United States Federal Reserve have taken the inflation rate to values not seen for 40 years; it could even be considered the highest in recent times.

Unfortunately, the increase in interest rates has caused a significant impact on the price of Bitcoin and the other cryptocurrencies that are below it; what most worries investors are that these rates may continue to increase.

It could be said that technology companies are the ones that are most affected when these types of measures are implemented, which in one way or another contributes to the fact that cryptocurrencies also fall, without leaving aside the strength that the dollar acquires.

Cryptocurrencies are considered high-risk digital assets, which is why many, faced with this type of measure, tend to sell their assets and shelter their capital for other assets that can multiply their value.

Another reason that has contributed to the decrease in the value of Bitcoin is the discontent of the miners, which represent the pillars in the creation of coins; if there is an excess supply, the miners, faced with a large number of teams in the world, prefer to reduce the issuance of digital currencies.

It directly influences the demand for cryptocurrencies; therefore, as new units are not generated, the price decreases significantly.

Many assume that we could be facing a bubble, but because the market cycles are so variable. But, at the same time, repetitive, it only remains to wait for where the breakpoint will occur that allows the trend to change.

Experts remain optimistic

Although the scenario does not seem encouraging, market specialists usually indicate those digital currencies can take a significant and unexpected turn.

The returns are already known to be high; it is now interesting to see the development that cryptocurrencies will have if they change their upward trend; everything moves in favor of their standing out as refuge instruments.

The regulations intended to be established on these digital assets indicate that they are increasingly attractive as financial instruments. Moreover, the massive use makes institutions want to be part of this economic diversity.

The users’ trust is maintained, and the fear of losing their saved money has made many retail investors withdraw their funds, but this does not mean that digital currencies will not continue to evolve.

The volatility of cryptocurrencies may be the main element that has caused many users to divest themselves of their digital assets, even knowing that their price could increase to unimaginable values in the long term.

The fact is that inflation drives many people upside down. Therefore, the most important thing is to guarantee to maintain their current assets because the economic situation does not indicate that it will change; on the contrary, it may be a little more complicated.

Conclusion

The financial market’s vulnerability has caused many traditional and digital assets to decrease in price, giving more excellent value to the dollar and even strengthening this currency that, according to Fed measures, has been sent to reduce its printing as a measure to attack inflation.

 

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