Factors contributing to the recent crash in bitcoin price: Hacks, concerns about Federal Reserve, and unfulfilled promises from Trump
Bitcoin price has experienced a significant crash, plummeting to its lowest level since November and resulting in a general downturn that has wiped out nearly half a trillion dollars from the cryptocurrency market over the past few days. This abrupt decline has seen bitcoin drop below $89,000 on Tuesday, just one month after reaching an all-time high above $108,000. The peak of bitcoin’s value coincided with the beginning of Donald Trump’s term, during which he promised to become the first “bitcoin president.” However, the recent downturn has been partially attributed to President Trump’s failure to fulfill any of his major promises since taking office.
Despite the Trump administration’s vocal support for cryptocurrency, the industry is still waiting for concrete actions to materialize, such as the implementation of a proposed Bitcoin Strategic Reserve. Petr Kozyakov, the co-founder and CEO of the crypto exchange Mercuryo, emphasized this point by stating that the market is eager for the administration’s pro-crypto stance to translate into actual measures.
An additional factor contributing to the broader crypto market’s decline was the recent hack of the Bybit platform, described as the “biggest digital heist ever.” Hackers managed to steal approximately $1.5 billion after gaining control of an ethereum wallet operated by a Dubai-based crypto exchange. Following this incident, Ethereum experienced a drop of over 15%, more than double the relative losses of bitcoin. Other popular cryptocurrencies like Solana and XRP also faced significant declines in value.
Bitcoin, established in 2009, has maintained its position as the most valuable cryptocurrency, with its finite supply often being compared to safe-haven assets such as precious metals. Despite this reputation, industry experts warn that the recent sell-off indicates that bitcoin is not yet considered a digital equivalent to gold by investors. Kozyakov described the current state of the cryptocurrency market as a “heliocentric reckoning” as bitcoin falls below $89,000 amidst a struggling US stock market.
Instead of being at the center of the financial universe, bitcoin remains on the periphery as an ultra risk-on asset that is easily sold at the first sign of trouble. This characterization suggests that investors view bitcoin as a high-risk investment option, rather than a stable digital asset comparable to traditional safe-haven investments. The recent price crash highlights the volatility and sensitivity of the cryptocurrency market to external factors, such as hacks, political promises, and general economic conditions.
In conclusion, the recent downturn in bitcoin’s price can be attributed to a combination of factors, including unmet political promises, security breaches, and broader market uncertainties. The cryptocurrency market’s susceptibility to external events underscores the ongoing challenges and uncertainties faced by digital assets like bitcoin. As the industry continues to evolve and mature, market participants will need to navigate these complex dynamics in order to adapt and thrive in a rapidly changing landscape.
