Bitcoin Is Off To the Worst Annual Start Ever Since its Beginning

    According to Bloomberg News, Bitcoin dropped below $40,000, the first drop ever since September, and is being referred to as the worst start of the new year since the initial days of the advent of digital currency, which is being seen as money’s alternative. 

    The original cryptocurrency started at a low after dropping by 6% to $39,774 while trading in New York, bringing the loss to 14% this year. This drop is the largest for a start in this New Year since 2012. It has slid by more than 40% ever since it reached an all-time high of $69,000 in early November. 

    According to Fiona Cincotta, one of the senior analysts of the financial markets of City Index, it has started with a shocking note, and a lot is going on. Fiona also said that it is known that Bitcoin is volatile, but there are huge moves that are being reflected. 

    Bitcoin was created in 2008 during the financial crisis that the world faced by an individual or a group known by the name Satoshi Nakamoto and the group has gained almost 500% since 2019 end. The first trading of Bitcoin began in 2009. However, as far as information related to pricing is concerned, it is limited.


    The pandemic driven by Covid-19 helped Bitcoin further break into the center stage as more and more investors and institutions actively got involved in the crypto market. At the same time, the government pumped stimulus funds into the market. Given the hawkish nature of the Federal Reserve, stocks that are riskier assets and digital assets are suffering now. 

    According to Bloomberg News, Jay Hatfield, the chief executive working at Infrastructure Capital Advisors, the cryptocurrencies will continue under pressure, and the Federal Reserve will reduce liquidity injections. Jay also said that it is pretty likely that Bitcoin could end as low as $20,000 in 2022. 

    According to Bloomberg Intelligence’s Mike McGlone, $40,000 is a significant level as far as technical support is concerned for a digital token. Cryptocurrencies act as a barometer related to risk appetite as far as current reduction is concerned. He also says that Bitcoin will gradually come out ahead as the coin becomes benchmark collateral and the world adopts a digital mode. 

    The interest rate is affected not only by a tighter Fed policy but also by equity risk premium while the Fed is withdrawing funds from capital markets. Meme stocks, cryptocurrency, unprofitable tech are impacted disproportionately since the investments are volatile. 

    Products related to digital asset investment witnessed an outflow amounting to a weekly record of $207 million approximately, as per CoinShares compiled data. Bitcoin has seen an outpouring of $107 million, said the asset management company. 

    As Noelle Acheson, working as the head of market insights with Genesis Global Trading, Bloomberg News also says that this drop in Bitcoin is mainly influenced by short-term traders and not likely by long-term traders. She has said that the long-term traders are on a buying spree during the dip.

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