The current slide of Bitcoin and other cryptocurrencies is being caused by a combination of short-term and long-term factors.
Many crypto investors have watched anxiously as governments of countries central to crypto trading or mining—including the U.S., China, India and Germany—have moved toward regulation. Meanwhile, crypto has been shaken by a wave of hacks and security breaches, including a $600 million hack of the Ethereum sidechain Ronin. These hacks have shaken consumer confidence in crypto and slowed growth from new potential buyers entering the field.
The number of real-world use cases that would bring newcomers into the crypto space seems to be slowing this year, Edward Moya, senior market analyst at Oanda, told CBS News. “There’s a belief that mainstream adoption [of Bitcoin] is taking a lot longer than people expected,”Some experts also believe that the recent struggles of UST, TerraUSD, one of the largest stablecoins, played a role in the most recent Bitcoin crash.
In order to defend UST’s price, the Luna Foundation Guard, which safeguards the stablecoin, drained its $1.3 billion bitcoin reserve and bought $850 million more in Bitcoin. “That [action could] add meaningful sell pressure on bitcoin and could drag down markets with it,” Corey Miller, growth lead at dYdX,
. Caleb Franzen, a senior market analyst at Cubic Analytics, explained in the same article that “historically negative performance” and “historically negative sentiment” can lead to “continued selloff,” which impacts prices negatively.that things will only get worse as more and more investors panic. But after the price of Bitcoin dropped below $30,000, its price corrected when evangelists “bought the dip,” or entered the market at a discounted rate.