The price of bitcoin recovered today after the cryptocurrency dropped to its lowest level since November 2020.
Bitcoin, which peaked at a high of just over $68,000 in November, has seen its price continually drop as investors have sold off the currency amid broader economic issues. Bitcoin hit a low of $17,934 on Saturday afternoon. Still, the price below $18,000 was brief, with bitcoin climbing back above $20,000 about 2 p.m. EDT today.
The main reason bitcoin and cryptocurrency have been falling through 2022 to date is the broader economy. Bitcoin was once seen as a hedge to volatile markets and falling stock prices, but to an extent, it has become a victim of its own success. Whereas once bitcoin and cryptocurrency were niche products, in 2022 it is mainstream among traditional investors and any shift in broader markets now affects cryptocurrency.
The trend for bitcoin to follow share prices was noted in January when it was reported that investors have been selling risky assets such as technology stocks as they prepared for higher interest rates coming from the U.S. Federal Reserve at the time.
Investor wariness of higher-risk investments amid concerns over the macroeconomic outlook was noted again in May. “In light of fears of rising inflation, most investors have taken a risk-off approach — selling stocks and cryptos alike in order to cut down risk,” Darshan Bathija, chief executive of Singapore-based crypto exchange Vauld, told Bloomberg at the time.
The link to the broader market, tech stocks in particular, continued for cryptocurrency into June.
Since November, the Nasdaq is down more than 30%, while tech stocks are down 62% since the beginning of the year. Bitcoin has dropped 56% since Jan. 1. While some media outlets are once again saying that the fall in bitcoin means that it’s “dead,” they wouldn’t say the same for the tech stocks that have fallen by similar or even higher amounts.
Bitcoin, of course, could fall a lot further, but there would be nothing remarkable about that. Bitcoin, over time, has gone up and down over and over again. Highs and lows are part and parcel of the cryptocurrency.
Bitcoin was trading at $20,468 as of 7:30 p.m. EDT, up 7% over the last 24 hours.
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