Bitcoin has not been worth much for a long time
The original cryptocurrency Bitcoin fell to its lowest level since the end of 2020 at 26,591 US dollars on the Bitfinex trading platform. In the space of a month alone, Bitcoin has lost a third of its value. Since the beginning of the year, it is a good 40 percent.
Other digital stocks also continued to fall in price. Ether, the second-largest digital asset after Bitcoin, fell well below the 2000 US dollar mark. Ether has lost about half of its value since the beginning of the year. The market value of all around 19,400 crypto assets is currently around $1.1 trillion. The record value of almost $3 trillion, reached in November last year, is far away.
There are two reasons for the fall of cryptocurrencies.
Experts attribute the bad mood of market participants to two reasons:
- On the one hand, the prospect of rising key interest rates in many places is causing skepticism in the crypto market. Digital assets do not yield current income, and interest-bearing investments such as fixed-income securities are becoming more popular.
- Turbulence in a well-known cryptocurrency called TerraUSD or UST is considered the second reason.
UST is a so-called "Stable Coin", which is supposed to distinguish itself from other digital values through special value stability. TerraUSD wants to achieve this through a special algorithm that is supposed to keep the cryptocurrency in a stable relationship to the US dollar.
In recent days, however, the UST exchange rate has broken away from its peg to the dollar and has come under considerable pressure. The incident, the reasons for which are still unclear, casts a bad light on the already tarnished reputation of many digital currencies. They are considered energy-intensive and vulnerable to criminal abuse. In addition, they often fluctuate greatly in value, which makes them rather unsuitable as an investment for small investors.
Image by Michael Wuensch