Why is bitcoin down?

Macroeconomic factors

The slowdown in global economic growth is an important reason for the decline of Bitcoin. Global economic growth is expected to slow to 2.9% in 2023, down from 3.6% in 2022. U.S. economic growth is expected to slow to 2.3%, down from 3.8% in 2022. Slowing economic growth has led to a decline in investor risk appetite, leading to a general decline in risk assets, including Bitcoin.

In addition, rising expectations of interest rate hikes are also an important reason for Bitcoin's decline. The U.S. Federal Reserve (FED) has begun raising interest rates and is expected to continue raising interest rates in the coming months. Raising interest rates would lead to higher borrowing costs, dampening economic activity and causing risk assets to fall.

The continued conflict between Russia and Ukraine is also an important reason for the decline of Bitcoin. The conflict between Russia and Ukraine has led to an increase in geopolitical risks, which has led to a decrease in investor risk appetite.

Regulatory factors

China‘s tightening of regulations on cryptocurrencies is an important reason for Bitcoin’s decline. In September 2021, China announced a complete ban on cryptocurrency mining and trading. This move caused the Chinese cryptocurrency market to collapse and hurt the global cryptocurrency market.

The U.S. SECs slow approval process for Bitcoin ETFs is also an important reason for the decline of Bitcoin. Bitcoin ETFs refer to exchange-traded funds that track the price of Bitcoin. The listing of Bitcoin ETF will provide investors with a more convenient way to invest in Bitcoin, which is expected to boost the price of Bitcoin. However, the SEC's slow approval process for Bitcoin ETFs has caused investors to worry about the listing of Bitcoin ETFs, thus affecting the price of Bitcoin.

Technical factors

Bitcoin prices have risen excessively and there is a need for a technical correction. In 2022, the price of Bitcoin rose from US$30,000 to US$68,789, an increase of more than 100%. With such a sharp rise, there is a need for a technical pullback.

In addition, the strength of short sellers has increased, which has also caused the price of Bitcoin to accelerate its decline. Bears are investors who sell short in anticipation of a price drop. The increase in short-selling power will lead to increased selling pressure in the market, leading to an accelerated decline in the price of Bitcoin.

What caused the drop in Bitcoin？

Governments could tighten up their cryptocurrency regulations, which could impact the value of Bitcoin. For example, China banned all cryptocurrency trading, which hurt the price of Bitcoin and other cryptos. Bitcoin's price is mostly determined by supply and demand, so shifts in market sentiment can cause big price swings. For example, a security issue could cause Bitcoin's price to drop if a Bitcoin exchange gets hacked. A big Bitcoin sell-off could cause Bitcoin's price to crash. Investors should do their research and talk to a financial advisor to understand the risks involved.

When was Bitcoin at its lowest price？

All-time lowest price:

Several early trades are considered contenders for the absolute lowest price, but the most documented occurrence was on October 12th, 2009, when 5,050 BTC were traded for $5.02, implying a price of $0.00099 per coin.

Lowest closing price:

Looking at official closing prices on major exchanges, the lowest recorded closing price for Bitcoin was $0.05 on July 18th, 2010.

It's important to consider the context of these early prices. At the time, Bitcoin was much less known and established, with far fewer users and much lower trading volume. Therefore, comparing early prices to today's values without considering the vast development and adoption that Bitcoin has undergone wouldn't be an entirely accurate representation.

Emerging cryptocurrencies could also fall

Emerging cryptocurrencies are even more susceptible to falling prices than established ones like Bitcoin.

Emerging cryptocurrencies generally have smaller market capitalizations and less trading volume, making them inherently more volatile than established coins like Bitcoin. This means their prices can fluctuate more dramatically, both upwards and downwards.

Many emerging cryptocurrencies are built on new and untested blockchain technologies. While this can offer potential advantages, it also increases the risk of technical issues or vulnerabilities that could negatively impact their value.

Some emerging cryptocurrencies have unclear or limited use cases compared to established ones. This can make them more susceptible to speculation and hype, leading to potential crashes if expectations are not met.

Emerging cryptocurrencies are often targeted by regulatory authorities due to their novelty and potential risks. This uncertainty can deter investors and create negative sentiment around the projects.

The emerging cryptocurrency space is more prone to pump-and-dump schemes, where individuals or groups artificially inflate the price of a coin before selling their holdings, leaving other investors with significant losses.

Have any of the top 10 cryptocurrencies fallen？

All non-stablecoin currencies in the top 10 have experienced significant price drops in both the past week and the past month. Global economic slowdown, Rising interest rates, and concerns about a recession are impacting riskier assets like cryptocurrencies. Increased regulatory scrutiny is creating uncertainty in the market. After a period of rapid growth, some currencies are experiencing price corrections. Fear and uncertainty are driving investors away from cryptocurrencies. It is important to note that the cryptocurrency market is inherently volatile, and price fluctuations are common. While the current decline is significant, it is crucial to remember that it is part of the historical pattern of this market.

Will crypto bounce back？

Despite significant crashes in the past, cryptocurrencies have often bounced back, sometimes reaching even higher values. For example, after the 2018 crash, Bitcoin's price quadrupled within a year. Blockchain technology holds potential for various applications beyond just financial transactions, potentially driving future adoption and value. Growing interest from institutional investors like hedge funds and corporations could add stability and legitimacy to the market. If regulations become more predictable and clear, it could provide reassurance to investors and attract new ones.

The current global economic climate with rising interest rates and potential recession could continue to suppress riskier assets like crypto. Stringent regulations or even bans could significantly impact the market. Scalability and energy consumption remain challenges for some blockchain technologies. Negative events like exchange hacks or scams could erode investor confidence, hindering recovery.