Bitcoin Prices Fell to a 16 Month Low, With Bearish Sentiment Hanging Over the Market

The loss of Bitcoin price records is being emulated by other alternative currencies, as many have fallen to levels not seen in months.

The price of Bitcoin (BTC), the world’s largest digital currency by market value, fell to a 16 month low on Wednesday as the broader cryptocurrency ecosystem continued to be hit by continued bearish sentiment.

The digital currency fell to US $26350.49 after depreciating by more than 30% in the past week. The basic factors that largely affect the price of Bitcoin include the interest rate hike of the Federal Reserve. Bitcoin, as an asset, has been labeled anti inflation by its biggest supporters, which means that when there is inflation in the economy, the sentiment attached to it will be triggered.

Although this inflation continues to exist as the impact of the coronavirus pandemic and the war between Russia and Ukraine, Bitcoin investors have made a clear response to the efforts of monetary supervisors to reduce this inflation growth.

Rising Inflation

The inflation reading on the price of goods and services jumped to 8.3% in April, which is close to the highest level recorded in the past 40 years. Rising inflation is only the basis for the Federal Open Market Committee (FOMC) to redouble its monetary and economic policies to help cushion rising inflation, which is considered by venture capital investors to be detrimental to the future performance of cryptocurrency.

In addition to these macroeconomic policies, Bitcoin’s price growth is threatened by the continued turmoil in the Tara ecosystem because its stable currency, the Tara dollar (UST), has failed to maintain its peg to the dollar. Ust reserves are kept in Bitcoin. Lun foundation guard (LFG), which is responsible for establishing reserves for UST, has a BTC worth billions of dollars to help cushion any form of crisis that the stable currency may face, such as the current crisis. LFG may throw out its Bitcoin to help re lock UST. In the long run, this may not be conducive to the stability of BTC. If this happens, investors do not want to be involved in this downturn.

Reaction to the sharp fall in the price of the substitute Bitcoin

The loss in Bitcoin prices is being emulated by other alternative currencies, as many have fallen to levels not seen in months. Ethereum‘s overnight trading price is as low as US $1748.30, which is still down 20.7% in the past 24 hours at the current price of US $1926.55.

Tera’s Luna is undoubtedly the worst performing one, because it has lost more than 99% of its value in just 24 hours. At the time of writing, the currency reached a low price of $0.02 on the binance exchange.This overall decline is a wake-up call for all cryptocurrency investors, and regulators will hope to use this as a basis to step up efforts to introduce comprehensive regulations to regulate this area.