What Happened to Bitcoin Today?

11 May 2022

If you're afraid of losing your money, don't invest in cryptocurrency. 

While discussing Bitcoin (BTC), it's worth noting the recent drop in Terra (LUNA). 

One of the most popular stablecoins, TerraUSD, has fallen by more than 90% in the last 24 hours (UST).

Returning to Bitcoin, the news isn't any better. In November 2021, the world's first decentralized cryptocurrency price hit $68,990. BTC has already lost 55% of its value since then.

Is this a sign that the bitcoin bull market is ending?

In December 2017, Bitcoin hit an all-time high of around $19,000 in its first substantial rise in the past several years. 

As of this writing, Bitcoin was down 82% from its highs over a year later. Investors have virtually written off the cryptocurrency.

In April 2021, Bitcoin climbed above $63,000, a new record. The cryptocurrency has fallen to $31,000 by July 2021. 

A correction of more than half a percentage point is nothing new for Bitcoin.

I also think that this is not the first time that Bitcoin has seen a dramatic reversal in its value. 

A timetable, of course, is hard to discuss. 

The decline in cryptocurrency prices, on the other hand, had purged the system of its excesses. Speculators will no longer be allowed to participate. 

There is a strong potential for long-term investors to build a portfolio.

Understanding why Bitcoin is corrected is also crucial. 

Cryptocurrency is no doubt vulnerable to regulatory obstacles. However, this isn't the driving force for the change: Janet Yellen, the US Treasury Secretary, welcomes prudent digital currency technology innovation.

There is a strong correlation between the Federal Reserve's decision to raise interest rates and the market's subsequent correction. 

It's worth noting that several once high-flying growth companies have fallen by 50% to 80% in the past few months. 

As a result, a sell-off in cryptocurrencies was inevitable due to their high beta.

Is this the end of the worst, or is there more to come?

In my opinion, Bitcoin has already been overhyped. Nevertheless, in light of the current economic concerns, I'd suggest a more gradual approach.

The prospect of a recession in the United States or a worldwide recession is one reason to conclude that the selling is excessive. 

The Federal Reserve rate rises will be less aggressive if the Fed believes in the high recession. However, a recession would need a return to lower interest rates.

Although there is concern about liquidity tightening, more expansionary measures might readily occur. 

This would suggest that Bitcoin, high-growth equities, and gold would once again surge.

As far as I can tell, Bitcoin is still in the process of finding its true value. These phases are likely to have a significant degree of volatility.

Overly optimistic analysts are predicting a rise in the price of Bitcoin to $500,000. Analysts who forecast the demise of cryptocurrencies, on the other hand, are a lot more negative. 

I'd put part of my money into Bitcoin and a few other cryptocurrencies in the middle. However, it can be simply 5 to 10 percent of my entire asset allocation to hazardous assets.

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