Bitcoin and other cryptocurrencies were under pressure on While U.S. stock and bond markets were closed on Monday in observance of the Labor Day holiday, the 24/7 nature of crypto means no respite from volatility for investors.

Why is bitcoin down? A single organization, such as a central bank, does not determine the value of Bitcoin (BTC), in contrast to fiat currencies like the Euro or the US Dollar. Instead, supply and demand, or to put it another way, the price consumers are willing to pay, determine the price.

Discover more about bitcoin by continuing to read.

What is Bitcoin and How Did It Start?

The world’s most popular cryptocurrency is not expected to flatline in this manner, according to investors. Is Bitcoin actually dead or is it just resting?

On November 9, 2017, Bitcoin had more than quadrupled in value in a year and was at its all-time high, trading at a record high of $66,938.

Along with almost everything else this year, it has fallen apart as the Ukrainian conflict, supply disruptions caused by the post-coronavirus outbreak, and the escalating price of commodities ruin investor confidence.

The era of easy money, when central bankers and politicians showered markets with unending monetary and fiscal stimulus to combat the global financial crisis and then Covid-19, gave birth to Bitcoin.

As the US Federal Reserve and other institutions drain the market of liquidity to quell inflationary fires, that era has abruptly and painfully come to an end.

The asset class that has suffered the most is not just cryptocurrency. Property seems to be the next to suffer, while shares, bonds, and even gold have dropped.

Why is Bitcoin Down Today?

The price of Bitcoin (BTC) has decreased by more than 13% this week, and cryptocurrency markets are once again in a state of chaos.

The fourth-largest cryptocurrency exchange in the world, FTX, which was formerly a mainstay of the sector, is what caused this week’s seismic disruption.

In order to save the company from a rapidly worsening liquidity crunch, FTX is looking for a solution. FTT, the native token of FTX, which has lost more than 80% of its value in the last few days, is at the center of the problem.

Due to FTX’s liquidity issues, the market has become contagious as investors in cryptocurrencies worry that something else will go wrong. Despite surviving the storm, Bitcoin (BTC) is still down more than 17% over the last five days. But the big “B” has been in the “green” for the last 24 hours, gaining 3%.

Ethereum (ETH), which has fallen nearly 18% over the last five days, shows how much harder the slump has been on altcoins. Sam Bankman-Fried, the CEO of FTX, supports the cryptocurrency Solana (SOL), which has lost more than 40% of its value over the last seven days. FTT has dropped 22% over the past 24 hours.

Why is the Bitcoin Price Volatile?

Bitcoin is the cryptocurrency with the highest trading volume, but its market is still relatively small in comparison to other global markets. This indicates that prices move up or down more dramatically and for less money. Bitcoin’s behavior would be very similar in terms of volatility if it had the same trading volume as, say, gold.

Demand would need to mimic Bitcoin’s deflationary behavior in order to even theoretically keep prices stable, as there are a finite number of bitcoins in circulation and their production is subject to strict regulations and has a steadily declining output (due to decreasing rewards for miners).

The price of Bitcoin may also be affected by news stories that are either good for or bad for the cryptocurrency’s reputation, uncertainty about the cryptocurrency’s future intrinsic value as a store of value, currency risks for large holders of Bitcoin regarding liquidation, and security flaws.

What is a Recession?

“In 2023, we expect to see a growing number of financial institutions accept cryptocurrency as a form of payment,” he says.

Mr Root notes that Mastercard recently said it is keen to start introducing plans to make cryptocurrency an “everyday way to pay”, while Beginning early in 2019, customers will be able to purchase some cloud services from Google through Coinbase thanks to a partnership the two companies have announced.

“With huge firms such as Google jumping on board, in 2023, we predict more banks and financial providers will join them,” he says.

For now, investors are still in the “wait-and-see” phase, with traders saying that Until Bitcoin closes above, say, $22,500, it is unlikely that it will begin a sustained recovery.

One thing has remained the same. Any cryptocurrency investment is still very speculative because the end-user case hasn’t been established.

As everyone seeks safety in advance of the recession, speculation is currently out of style.

Those with extra cash may be tempted to purchase Bitcoin when others are afraid, but as always, only invest money you can afford to lose.

Today, there are fewer of us in that circumstance.

Also Read: Why Are Gas Prices So High?

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