Bitcoin, the first decentralized digital currency, has recently been seeing a drop in price. This is not only impacting investors but also the overall cryptocurrency market. Bitcoin saw a drop to around $43,000 on Monday but it could be attributed to other factors including its recent listing on two major exchanges-Bithumb and Coinbase.
The fact that Bitcoin’s prices are falling can have multiple effects on investor confidence as well as general public perception of cryptocurrencies overall. The immediate effect is that people may start pulling out their money due to fear of investments decreasing further or even losing all value which would lead to an increased risk aversion among investors and cause general instability in the cryptocurrency market. There is also concern about how this will affect future adoption rates for cryptocurrencies which could translate to a sustained increase in the time it takes for transactions to be processed.
This is not only impacting investors but also the overall cryptocurrency market
This is not only impacting investors but also the overall cryptocurrency market. According to a report from Bloomberg, this type of fall in price has been common for Bitcoin over the past 14 months.
“Bitcoin is a currency with an extremely high risk,” said Henry Smith, a partner at London-based hedge fund Marshall Wace citing bitcoin’s volatility.
Smith added that it’s been difficult to see any rapid growth in the currency and there have been multiple downturns in recent times.
Many investors are worried about how it will affect them, but some analysts say there may not be anything to worry about.
“Bitcoin’s value isn’t the only thing in the market,” said Jehan Chu, a partner at blockchain investment and advisory company Kenetic Capital.
He further stated that if the prices of other riskier cryptocurrencies continue to increase, then Bitcoin would probably follow suit.
One such cryptocurrency is Ethereum which was recently launched on Coinbase’s exchange increasing investor interest.
Kenetic capital also pointed out that some of the steep falls in Bitcoin’s price could be due to other factors including some recent listings on major exchanges.
However, for some investors who are already thinking about taking their money out, it might be a little too late.
The first decentralized digital currency, Bitcoin is seeing a drop in price. Some investors are worried about how it will affect them but some analysts say there may not be anything to worry about. The decline of prices could also lead to more risk aversion among investors and cause general instability in the cryptocurrency market which would translate into slower transactions processing time for cryptocurrencies as well as future adoption rates.
For those who have already withdrawn their money from investments, it might be too late because they’ve seen such steep declines in Bitcoin’s value that many people aren’t willing to put any more money into it or hold onto it long term. It’s important for anyone investing in cryptocurrencies like Ethereum and Bitcoin should do so with caution since this type of fall can happen again at any time.