By Michael B. Cohen
Vice President of Global Operations
Cryptocurrency traders were hit hard by the most dramatic plunge in cryptocurrency assets since the upward crypto trend began in 2020. Bitcoin, Ethereum, and other digital coins shed $1 trillion in just one month. Losing 55% of its value from November 2021 highs of $69,000, bitcoin dropped to $31,000 the first week of May and down to $27,000 a week later.
Will cryptocurrencies continue to slide? Should traders buy the dip, hold steady or give up on bitcoin? What does this mean for traders who have accounts with crypto brokers?
It was no secret from the beginning that bitcoin and other cryptocurrencies are highly speculative. In fact, there was a similar plunge in bitcoin in the spring of 2021 from its highs in October 2020. Some of the reasons crypto assets usually sell off such as highly leveraged speculative investors and rumors on social media – may be at work with the most recent selloff, but it seems that inflation figures and the selloff of UST stablecoin are the main triggers.
The Main Culprits of the Bitcoin Selloff: UST, Inflation Data and Regulations Proposals
Bitcoin and other cryptocurrencies may have been punished by problems with UST stable coin, which was meant to be pegged to the U.S. dollar. TerraUSD is an $18 billion algorithmic stable coin that was supposed to maintain a $1 peg but plunged to just 26 cents. Its support coin, luna, consequently lost 99% of its value. This unexpected crash devastated the crypto market as a whole, including bitcoin.
Additionally, CPI data has cooled off the markets, including crypto. The news about inflation alone did not affect the crypto market, but there are some indications that the economy may slow down because of fluctuations in energy prices. Although cryptocurrencies are often hailed as a hedge against inflation, general bearishness found its way to crypto-assets.
Europe and the United States are now considering proposals to regulate cryptocurrency – a development that may be welcomed by some crypto holders but may put a damper on prices of digital assets. Many embrace cryptocurrencies precisely because the blockchain is currently free of government regulation and they may see the walls caving in on their safe haven.
What does this news mean for cryptocurrency holders and traders? It certainly isn’t an optimal time to sell. Will bitcoin continue its downward spiral? It’s possible, but it’s important to remember that cryptocurrencies have seen some dramatic fluctuations in the past and this isn’t likely to spell the end of cryptocurrency as a whole. It’s still clear that bitcoin is here to stay.
Traders may be tempted to buy bitcoin or other crypto coins while they are low so they can ride the next wave. However, that doesn’t mean they should act hastily. Researching crypto trading opportunities and opening an account only with regulated brokers is essential. Unfortunately, crypto frauds abound on social media, WhatsApp, and even email spam.
Holding a bitcoin wallet means ensuring it is safe at all times. If a fake broker or merchant won’t refund your bitcoin or allow you to make a withdrawal or if your bitcoin wallet has been hacked, talk to MyChargeBack immediately. We will launch a crypto investigation and track down your funds on the blockchain.
MyChargeBack Will Help You Find Your Funds on the Blockchain
If you have lost money to a cryptocurrency scheme, seek fund recovery assistance right away. Consult with MyChargeBack experts and get started with your fund recovery claim. We have extensive knowledge and working relationships with regulators and more than 450 law enforcement agencies around the world, as well as the solutions that can improve your prospects of getting your cryptocurrency back.