There has recently been a bit of uncertainty in the cryptocurrency world, which includes the well-known Bitcoin, as the United States government is looking at measures to implement to address any economic, regulatory and national security challenges.
Unaware of what aspects could be implemented, this has led to some traders opting to sell their Bitcoin, with the price having dropped from more than $68,000 to just above $37,000.
Why is Bitcoin going down?
Part of the reason behind this sharp decline in the value of Bitcoin is down to policy changes from the US Federal Reserve, as its chair, Jerome Powell, declared last December that the monthly rate at which it reduces asset purchases would be doubled by the Federal Open Market Committee (FOMC).
The measures brought forward by the Federal Reserve to try and control inflation have resulted in Bitcoin being negatively impacted, as the value of supposedly risky assets, such as Bitcoin, has declined somewhat after the fiscally conversative changes.
What’s more, as Bitcoin becomes more widely adopted and is viewed as a more reliable option, it will become stronger but the value of it will go down. At the moment, the price goes up and down in a manner similar to stocks.
What should Bitcoin investors do?
The recent market changes should not lead Bitcoin investors to panic, although it’s worth understanding the reason behind the price movements.
Aside from the rumors and government policy changes, the price of Bitcoin and other digital assets will begin to be more in correlation with the prices we see with traditional assets.
Any Bitcoin investors who are worried about the cryptocurrency’s price are able to benefit from monitoring developments related to both Bitcoin and the broader financial market.
“This is the fifth time Bitcoin‘s price has fallen by 50% or more since its inception in 2009,” said Ric Edelman, founder of the Digital Assets Council of Financial Professionals.
Yet, it is expected that there will be more regulation of Bitcoin and other digital assets.