Bitcoin suffered a shocking fall in value over the weekend that saw the crypto hitting lows not seen since last July. It comes amid warnings of a ‘crypto winter’ that could mirror the devastation that knocked 80% off the price of Bitcoin back in 2017 and 2018.
The price of Bitcoin slumped over $10,000 between Friday and Monday, and at one point reached a shocking low of $33,184. While the world’s largest cryptocurrency made up for lost ground and is back up to $36,603 at the time of writing, it was still a deeply sobering moment for all crypto investors.
This is especially true when contrasted against the phenomenal run of form that Bitcoin was enjoying in fall 2021. The cryptocurrency is experiencing a loss in value of nearly 50% compared to the record peak that it experienced in November. This saw the price of Bitcoin hit $68,990 and there were even some analysts who predicted that the crypto could hit a value of $100,000 by the start of 2022.
As such, there are fears that Bitcoin could be on its way to suffer some of the dramatic falls that it suffered five years ago. While a drop in value of 50% is still just about within correction territory, there are fears that some ‘blow-off tops’ may occur where there is a sharp rise in value followed by a massive plummet of around 80%.
Further turmoil amid threat of crypto winter
It wasn’t just Bitcoin that suffered on the markets. Overall, the global markets have had a bleak time over the past couple of months with over $1.5 trillion wiped off. Leading cryptocurrencies such as Ethereum, Cardano, Ripple and Bitcoin Cash were all hit by the market turbulence and are showing little sign of getting back to where they were before.
All of which has led to concerns that a ‘crypto winter’ might be on the horizon. This is especially true considering that Russia’s central bank has issued a ban on crypto mining in a move that mirrors those made in China.
However, there are some analysts who believe that things might not get as bad as feared. Instead, the lull in crypto price rises might just be part of an overall cooling-off period in the economy. This could turn out to be a good thing as it would lessen the negative effects caused by some of the most dramatic rises in inflation seen in decades.
The crypto market had enjoyed a largely spectacular 2021 with impressive gains made from new forms of speculation such as NFTs. However, with the market as a whole retreating from investing in risky assets such as cryptocurrencies, there has been a renewed interest in stablecoins. In particular, the USD Coin which is tied to the price movements of the US dollar has seen its market value rise by more than $5 billion since the weekend. All of which shows that 2022 could be a largely unpredictable year for the famously volatile cryptocurrencies.