Bitcoin hasn’t been worth much for a long time
The original cryptocurrency Bitcoin fell to its lowest level since late 2020 at US$26,591 on the Bitfinex trading platform. In just one month, Bitcoin lost a third of its value. Since the beginning of the year, it is a good 40%.
Other digital stocks also continued to decline. Ether, the second digital asset after Bitcoin, fell well below the 2000 US dollar mark. Ether has lost about half of its value since the start of the year. The market value of all approximately 19,400 crypto assets is currently around $1.1 trillion. The record value of nearly $3 trillion, reached last November, is a long way off.
There are two reasons for the fall of cryptocurrencies.
Experts attribute the bad mood of market players to two reasons:
- On the one hand, the prospect of rising key interest rates in many places is causing skepticism in the crypto market. Digital assets do not generate current income, and interest-bearing investments, such as fixed income securities, are becoming increasingly popular.
- Turbulence in a well-known cryptocurrency called TerraUSD or UST is considered the second reason.
UST is a so-called “Stable Coin”, which is supposed to distinguish itself from other numerical values by a special value stability. TerraUSD wants to achieve this through a special algorithm that is supposed to keep the cryptocurrency in a stable relationship with the US dollar.
In recent days, however, the UST exchange rate has broken away from its dollar peg and has come under considerable pressure. The incident, the reasons for which are still unclear, casts a bad light on the already tarnished reputation of many digital currencies. They are considered energy-intensive and vulnerable to criminal abuse. Moreover, their value often fluctuates considerably, which makes them rather unsuitable as an investment for small investors.
Image by Michael Wuensch