The cryptocurrency industry’s inaugural asset is experiencing one of the biggest downturns in its short history. Bitcoin has recently fallen to its lowest value in the last year-and-a-half. Having peaked at a value of $70,000 per Bitcoin in November 2021, almost $50,000 has been shaved off its value per Bitcoin in the last seven months. As of 15th June 2022, it has been trading at around $21,400 per Bitcoin. What’s happening and why is the Bitcoin crash causing a ripple effect throughout the rest of the crypto scene?
Crypto analysts believe the real-world problems of surging inflation and rising interest rates are having a knock-on effect on crypto values. With stock markets also threatening to enter a bear market, it’s possible that a big reason for the plunge in Bitcoin is that many investors in BTC have chosen to liquidate their positions and stockpile as much cash as possible as a safety net. Despite the difficult backdrop for Bitcoin right now, it’s still an asset that retailers are keen to accept and utilize as part of their cash flow.
In Canada, there are still plenty of businesses and merchants that accept Bitcoin and other cryptocurrencies as legitimate forms of payment. For example, in the newly regulated Canadian iGaming market, brands like Bodog make it possible for Bitcoin holders to play casino slots for real money, with deposits permitted in Bitcoin, Bitcoin Cash, Bitcoin SV, Litecoin, Ethereum, and USD Tether. Major Canadian gift card brands like Coincards and CoinGate also permit Bitcoin transactions in exchange for gift cards with the biggest names in retail and e-commerce, namely Amazon and Walmart.
In addition, online travel agents like Travala still accept Bitcoin, with discounts worth up to 40% available to those booking flights and trips with cryptocurrency.
Other crucial developments affecting Bitcoin
In recent days, two of the most prominent names in cryptocurrency trading and investing have experienced severe issues. Binance, the world’s most liquid cryptocurrency exchange, was forced to cease Bitcoin transactions for several hours. The platform attributed this hold-up to a “stuck transaction”, although many have since looked upon this excuse with skepticism.
Additionally, the collapse of decentralized finance (DeFi) platform Celsius has been a dagger in the heart of many in crypto circles. The “extreme market conditions” have raised serious question marks over Celsius’ long-term future, with its liquidity drying up fast. The firm takes cryptocurrency in exchange for annual yields on investor deposits, but if there’s no yield to back this up, the concept folds like a pack of cards.
Is it possible to anticipate a recovery for Bitcoin and crypto?
In truth, Bitcoin and all other cryptocurrencies are entering unchartered territory at present. Consumer and retail investor behaviours are changing as confidence in real-world economies diminish by the day. Analysts insist that extreme caution must be taken to enter the markets right now. With very little historical data to fall back on, the price of Bitcoin remains volatile.
Although there is a general feeling within the cryptocurrency community that a “pump” will return sooner or later, it’s going to take time for demand to outstrip supply once more.
