Tuesday. 28.05.2024
CRYPTOCURRENCY

Bitcoin hits lowest level in half a year as crypto downturn continues

Rising interest rates are toxic for particularly risky investments such as digital currencies because they tend to increase the attractiveness of investments perceived as safe
07 January 2022, South Korea, Seoul: A man looks at an electronic signboard of a cryptocurrency exchange in Seoul that shows the price of bitcoin having nose-dived during a trading session, in the wake of a massive disturbance in Kazakhstan, a major bitcoin mining hub. Photo: -/YNA/dpa.
A man looks at an electronic signboard of a cryptocurrency exchange in Seoul that shows the price of bitcoin. Photo: YNA/dpa.

After a temporary stabilization, prices on the cryptocurrency market continued to fall at the start of the week.

On Monday, Bitcoin cost around 32,970 dollars, the lowest level in about half a year. On Thursday, the oldest and best-know digital currency cost around 10,000 dollars more.

Other crypto assets such as Ether, the number two on the market, also fell again after a brief stabilization.

The around 17,000 digital currencies currently in existence were worth a good 1.5 trillion dollars at the start of the week. Before the recent downturn, they were worth more than 2 trillion dollars.

Observers explained the price losses with the generally gloomy mood on the financial markets. One reason for this is increasing tensions over the Ukraine conflict.

In addition, there is the prospect of tighter monetary policy in the United States, where the Federal Reserve is considering raising interest rates sooner than previously thought.

A risky investment

Rising interest rates are toxic for particularly risky investments such as digital currencies because they tend to increase the attractiveness of investments perceived as safe and interest-bearing, such as government bonds.

Crypto investments have recently also been burdened by the critical stance of the Russian central bank, which proposed a far-reaching ban on the use of digital currencies last week.

The production (prospecting, mining) of cryptocurrencies, which is done through complicated calculations on mostly energy-intensive computer systems, would also be affected.

Russia is considered one of the strongholds of crypto mining.

Bitcoin hits lowest level in half a year as crypto downturn continues