Bitcoin & Ethereum: Possibly Losing Value in 2023
Thursday brought more uncertainty to Wall Street as investors tried desperately to think about what the latest developments from The Federal Reserve might mean for both stocks and the economy. Cryptocurrencies were not an exception, with some continuing their losing streaks while others—like Bitcoin--suffered heavy losses all day long despite an optimistic outlook by analysts. With high levels of fixed expenses associated with running these machines it could be tough for miners to keep their heads above water if this trend continues unchecked. Let’s take a closer look at the ‘why’ factor.
Correlations to The Drop in Crypto (2023
As many investors dabble on trading platforms like BitiQ website cryptocurrencies took a bruising on Wednesday as the Federal Reserve announced that they would be raising interest rates. The cryptocurrency market has been fearfully correcting ever since, with few sources offering hope for recovery other than some hopeful commentaries from Fed officials who say there is still plenty of time before rate hikes come into effect. With Bitcoin continuing to drop, the income statement for miners would take a dive and investors might be quite concerned.
According to Coinbase, Bitcoin has continued its downward spiral and is currently valued at £30,873.27 (after recently dropping). As of now, Ethereum's value is at £2,365.
The crypto market saw some shaking today with Bitcoin dipped slightly, but most other top cryptocurrencies experienced dips as well. Some exceptions include Dogecoin, which rose over 8% in value after having risen yesterday; Solana also enjoyed an increase due more than doubling overnight - their shares are up for sale now!
Reasons Prices Went Downhill
Cryptocurrency markets are plunging as traders dig out of a long winter run. Why is Ethereum falling? All things considered, you probably wouldn’t want to buy an "alternative" if the thing that really makes your heart race already sells low.
Cryptos heading south for the winter include Solana(CRYPTO: SOL), Luna (CRYPTO: LUNA) and Avalanche(AVAX). These three cryptocurrencies have lost 10%, 9% ,and 7%. According to CoinGecko, the market reopened Thursday morning at around 8am-9 am EST time zone which saw them lose another 1/10th percent in 24 hours, ending with their lowest points.
It's safe to say that these three cryptocurrencies are having something of an alternative renaissance. "SoLunAvax Trade," the trade name for a group including all three assets, has seen gains in excess of 500% since last year with investors flocking to them as an alternative Ethereum or CRYPTO:ETH . CoinDesk credits their success largely on strong performance from Litecoin (which was up 300%) and Dash during this same period - though there is one other factor according to experts at CoinDesk; traders are hungry not only for profits but also new coins into their portfolios.
What’s In Store for Bitcoin Prices Now?
Something that stands out even more is a theory raised by CoinDesk toward the end of its report on SoLunAvax. Apparently "over $800 million in crypto liquidations" (i.e,sales) had taken place over 24 hours.
When the price of cryptocurrency goes down, it's not uncommon for buyers who took out loans from brokers to force liquidate their assets. In this situation you have two options: either A) pay back what was loaned or B) sell your coins at any cost until they're able to get enough money so that there won't be a margin call anymore - which means selling all remaining balances even if it's below market value.
Cryptocurrency is the new Wild West and there are few rules in place to prevent investors from getting burned. Unfortunately for those who have been playing with fire by going long on margin, it looks like their time might finally be up because CoinDesk reports that some exchanges are imposing "margin calls" - an event where traders must put more money into their accounts or else face heavy losses. If they are right, then now might be the best chance (if it applies to you) before things get worse.
In addition, Elon Musk’s decision to stop accepting Bitcoin for Tesla services is a sharp u-turn from only two months ago. The company had started accepting the cryptocurrency as payment on February 21, 2021 but now they are back tracking and seeking out other methods of payment such as Credit Cards or Cash - despite already having an agreement in place where customers could use BTC exclusively with no additional costs incurred.
Conclusion
The fear of a tightening Federal Reserve is sending investors running for cover. Bitcoin and Ethereum have been hit the hardest, with some analysts predicting that they could lose 50% or more in value over the next year as monetary policy tightens globally - which would be bad news for anyone who bought these currencies at recent highs. The feeling among traders seems pretty simple: When there's uncertainty about how interest rates will respond to economic growth then people tend toward safe haven assets such as gold.