
The Bitcoin (CRYPTO: BTC) the cost is decreasing today.
Again.
In mid-afternoon dealings on Wednesday, the globe's initial and largestcryptois exchanging virtual hands for US$76,619 (AU$109,097). This represents a decrease of 2.4% in the last 24 hours and a drop of 14.5% compared to this time last week, as per information from CoinMarketCap.
This shows a 24.8% decline in Bitcoin's value over the past year, bringing the cryptocurrency very close to hitting new one-year lows.
Only on 7 October, less than four months back, did Bitcoin investors rejoice as the token hit an all-time peak of US$126,198. However, following a general shift towards negative trends since that time, the leading cryptocurrency has dropped by 39.3% from those levels.
You're unlikely to hear much celebration fromEthereum (CRYPTO: ETH) investors either.
The second-largest cryptocurrency has fallen by an additional 4% in the last 24 hours, now trading at US$2,258. This brings the Ethereum price down 29.2% over the past month and a significant 54.1% from its peak on 22 August last year.
This is what has been causing fluctuations in cryptocurrency markets.
Why is the value of Bitcoin decreasing?
Bohan Jiang, senior derivatives trader at FalconX, mentioned that crypto investors who are disappointed with the dip are increasing the selling pressure (quoted byBloomberg).
Many traders were attempting to purchase during the decline, wagering on areboundover $80,000," Jiang stated. "As Bitcoin declines, many of those positions have been closed, exerting downward pressure on prices."
Augustine Fan, a partner at the cryptocurrency options platform SignalPlus, attributed the decline in Bitcoin's value to weakening investor confidence.
Bitcoin sentiment is at its lowest point," Fan stated. "Volatility has finally increased following a year of decline as traders sought safety, with markets operating in a bearish environment.
The value of Bitcoin initially increased following the introduction of several spot exchange-traded funds (ETFs) that directly represented the cryptocurrency. However, these ETFs are now contributing to downward pressure, as significant withdrawals have been recorded since November.
And, similar to most other risk assets, the token continues to be very responsive to interest rate changes. As markets now anticipate fewer rate reductions from the US Federal Reserve (and the RBA having increased rates yesterday), crypto appears to be encountering additional challenges.
As per Morten Christensen from AirdropAlert.com (cited byBloomberg), "Bitcoin continues to behave like a high-beta risky asset, rather than digital gold. This doesn't imply the idea is obsolete; it suggests it hasn't arrived yet."
The post Why is the declining Bitcoin value falling once more today? appeared first on The Motley Fool Australia.
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More reading
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Motley Fool contributor Bernd Strubendoes not hold any position in the stocks listed. The Motley Fool Australia's parent company, Motley Fool Holdings Inc., holds positions in and has recommended Bitcoin and Ethereum. The Motley Fool Australia holds positions in and has recommended Bitcoin and Ethereum. The Motley Fool has adisclosure policy. This article provides general investment guidance only (under AFSL 400691). Approved by Scott Phillips.
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