Bitcoin (BTC), the world’s largest cryptocurrency, is trading under a lot of pressure. One bitcoin is now worth about $17,000, compared to about $69,000 in November 2021. Since then, Bitcoin has been on a downward trajectory, and it now seems almost impossible for it to return to the highs it witnessed long ago in 2021. .
So, if you are currently investing in Bitcoin, what should you do? If you run a mile or have high hopes that Bitcoin will soon return to its highs. Through this detailed read, we explain why Bitcoin crashed today and what Bitcoin’s crash means for cryptocurrency investors.
What is going on with Bitcoin?
2022 has been a tumultuous year for cryptocurrency king Bitcoin (BTC). Bitcoin, which peaked in November 2021 and crossed the $69,000 level, is now struggling to stay even around $18,000. After the crash of FTX, Bitcoin is unable to cope with the market pressure and thus shows no real signs of recovery.
Overall, the cryptocurrency market has shown a bearish trend and has been extremely volatile since the collapse of FTX, one of the largest global cryptocurrency exchanges. Apart from the FTX crash, rising interest rates and inflation fears also played a big role in keeping cryptocurrency prices low.
After the fatal November crash, Bitcoin fluctuates between $16,000-$18,000 levels. BTC has recorded an almost 80% drop in value since hitting an all-time high in November 2021. It also crossed the $18,000 level on December 15, 2022, but this price point only lasted for a short period of time before falling back down again. Under $18,000. Experts believe that Bitcoin is about to bottom soon, but others think that there is more of a downtrend on the way.
Here’s how BTC’s current price has fallen from its highs in the past year:
Why Bitcoin Will Fall in 2022
Starting 2022 on a positive note, Bitcoin might have seen its peak again by the end of 2022, but some unfortunate events caused too much volatility in the price of BTC, which caused BTC to fall from $50,000 to $15,000 in the past. it happened a year.
Recent price fluctuations in Bitcoin and the overall cryptocurrency market have been attributed to weak macroeconomic headwinds and recent bankruptcies in the cryptocurrency world. Bitcoin went down as a result of:
- Russian-Ukrainian war.
- Fear of rising inflation means more cost of living.
- Uncertainty about rising interest rates in the US and UK
- China makes cryptocurrency transactions illegal.
- New tax system in India.
- The Terra-Luna crash.
- Finally, the bankruptcy of FTX, the largest global cryptocurrency exchange.
The above-mentioned reasons led to the fall in bitcoin prices in 2022. Such unexpected and unfortunate events not only led to severe selling and panic selling in the markets, but also played a major role in disrupting investor sentiment.
What does the Bitcoin crash mean for cryptocurrency investors?
Bitcoin, one of the most popular cryptocurrencies among the big lots, has also been touted as an alternative to gold, which could prove to be a hedge against inflation. Similarly, Bitcoin is the only cryptocurrency that is widely accepted as a legal tender like fiat currencies, but of course these corporations are few and far between.
Bitcoin investors are well aware that digital assets are extremely volatile in nature and will change within 24 hours. This means that even the price of Bitcoin is purely based on speculation among investors as to whether it will rise or fall in the future. Investors very strongly believe that as Bitcoin prices fall, they can rise again.
Market experts are quite sure that given its volatile nature, Bitcoin will one day pick up momentum again and show a price increase that could last for weeks, months or even years in the future. Proponents of Bitcoin see it as a useful way of investment that helps diversify the overall portfolio and can yield huge returns at any time unlike any other form of investment. However, before investing in Bitcoin, one should be aware of the basics that can help them make a wise financial decision.
Tips to consider before investing in Bitcoin
- Don’t invest your entire life savings. It is advisable to invest only 5% to 10% of your total portfolio in cryptocurrencies such as Bitcoin.
- Invest the part of the money that you can afford to lose.
- Just like other traditional assets, treat cryptocurrency as a long-term investment.
- Understand the volatility of Bitcoin and then make the call to invest.
- Thoroughly research the best time to buy or sell Bitcoin to maximize returns.
One thing is for sure, Bitcoin is volatile and volatile, with a record of boom and bust periods, leaving many wondering if it is a safe investment. It is also not regulated like any other form of conventional investment product such as stocks or mutual funds. Moreover, Bitcoin has no intrinsic value of its own and is entirely based on pure speculation.
Therefore, never hesitate to consult a financial planner who can guide you on how much and which cryptocurrency fits your investment strategy according to your financial goals.
Step by step guide to buy Bitcoin in India?
Once you are very sure about investing in Bitcoin, check the following steps to buy Bitcoin in India:
- Step 1: Create a free account by visiting selected cryptocurrency exchanges through their website or app.
- Step 2: Register and verify your identity through the app or website.
- Step 3: Click on the “buy” tab, which is usually associated with the available cryptocurrency options. For example, ABC exchange will have XYZ number of cryptocurrencies including Bitcoin with a buy link attached to the name of the cryptocurrency.
- Step 4: Buy Bitcoins by choosing any of the payment modes like credit/debit cards, net bank transfers or peer-to-peer (P2P) trading options and adding funds in the form of your fiat currencies like INR.
- Step 5: After buying Bitcoins for payment in fiat currencies, you can store your Bitcoins in your personal digital wallet or simply store them in an exchange account. You can also sell your cryptocurrency at any time or trade it with other cryptocurrency or buy shares of it for passive income.
How does India feel about Bitcoin and other cryptocurrencies?
The Indian government has been fiercely opposed to cryptocurrencies like Bitcoin and their acceptance as a legitimate source of finance since day one. The Reserve Bank of India (RBI) has clearly stated a number of threats and risks associated with Bitcoin and the overall ecosystem of cryptocurrency markets, such as financial instability, non-transparency and issues related to illicit financing among others. In fact, the RBI has strongly recommended to regulate the crypto sector by bringing a law.
In the 2022 budget, India’s Finance Minister Nirmala Sitharaman even labeled cryptocurrencies as “digital assets” rather than “currency”. To reduce the demand for cryptocurrencies, the government imposed a strict tax regime on the income from cryptocurrency transactions, imposing high taxes of up to 30%. In addition, the government has also levied 1% tax deducted at source (TDS) on payments related to such transactions with effect from July 1, 2022.
In a circular dated February 2022, the RBI made it clear that “cryptocurrencies cannot be defined as currency, asset or commodity; they have no underlying cash flow, they have no intrinsic value; they are close to Ponzi schemes and can be worse. These should be enough reasons to keep them away from the formal financial system.”
In the aftermath of the FTX crash, the world is talking loudly about bringing digital assets like Bitcoin under a proper legislative framework and regulatory scanner. Due to India’s strict stance against cryptocurrencies, it would not be wrong to say that the Indian government has been able to protect investors from the massive crypto crisis.
Bottom line
Bitcoin prices are falling today, but one never knows what the future holds. So, if you’ve decided to invest or hold your position in Bitcoin, be prepared for a bumpy ride as well. Do your due diligence and don’t stick to just one cryptocurrency. It spreads the risk by intelligently spreading your hard-earned money. Invest in Bitcoin that you can afford to lose this amount.