If you’ve been following the cryptocurrency market, you’ve probably wondered why the Bitcoin price is dropping. After all, the S&P 500 is down 6.6% from its 2009 high, and a single bitcoin can’t have a lower price than the S&P 500. The price of bitcoin has been falling for more than eight years. The reason is that BTC is a risk asset, and its price moves wildly under any market conditions.
Although price drops are inevitable in the crypto world, it can be difficult to keep up with fluctuations. The US Federal Reserve’s new stance on asset purchases may have influenced the current sell-off. As such, a decline in the price of Bitcoin could potentially destabilize other risky assets. Still, the Bitcoin price remains a valuable asset, as it serves as a digital currency that can transcend borders and does not require government backing.
While many analysts claim that bitcoin is immune to global financial shocks, others argue that it has fallen in tandem with the stock market. It is a good hedge against inflation and uncertainty, but the price of bitcoin has been negatively affected by many factors, including international regulation and social media. While Bitcoin is not immune to market fluctuations, it does respond positively to good news. Historically, Bitcoin has risen in tandem with global finance.
The recent heightened tensions with Russia may have negatively impacted Bitcoin’s price. In the wake of the crisis in Ukraine, Western nations have imposed new sanctions on Russia. In September 2021, the Chinese government clarified that mining bitcoin was illegal. As a result, bitcoin has responded to news from regulators and legislators. Furthermore, President Biden’s infrastructure bill also hurt bitcoin, as the bill required decentralized wallet companies to collect and report taxes from their customers.
