The cryptocurrency market has shrunk by more than 1 trillion
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The cryptocurrency market has shrunk by more than $1 trillion in six months

Traders’ flight from risky investments has halved the price of bitcoin and many other digital assets, causing the total cryptocurrency market cap to drop by more than $1 trillion since last November. Investor fears combined with rising inflation and the current difficult geopolitical situation in the world led to the collapse of the digital asset market.

    Image Credit: Emil Lendof / The Wall Street Journal

Image Credit: Emil Lendof / The Wall Street Journal

Widespread price swings are typical of many cryptocurrencies, but even seasoned investors were surprised when Bitcoin lost 29% in price in just seven days that just ended. After the world’s most popular cryptocurrency, the price of the stablecoin Tether fluctuated, and the price of the Luna cryptocurrency, which was in the top 10 in terms of capitalization a few days ago and was trading at $85 per coin, fell to $0.005 per coin Unit.

Recently, investors are watching the turning point in the financial markets with rising interest rates amid raging inflation. With this in mind, they are actively shedding risky assets like cryptocurrencies and preferring to invest in something more stable and predictable.

    Image source: CoinMarketCap

Image source: CoinMarketCap

The past year has been good for the cryptocurrency market and it seemed that digital assets would become more legitimate after long being seen as a speculative product. Last November, Bitcoin and Ethereum, the world’s two most popular cryptocurrencies, hit record highs. The cost of bitcoin rose to $67,802 per coin on November 9, and they gave $4,800 for an “ether”. As of today, both cryptocurrencies are down 58% and 60%, respectively, from their November highs.

    Image source: The Wall Street Journal

Image source: The Wall Street Journal

Note that the decline in cryptocurrencies started before last week, facilitated by exorbitant inflation. In the past, bitcoin and other cryptocurrencies have been talked about as a hedge against inflation. In reality, however, everything turned out differently. Rising inflation is forcing the US Federal Reserve to raise interest rates faster, which investors say will slow economic growth. Ultimately, investors get rid of risky assets, one of which is cryptocurrency.

About the author

Robbie Elmers

Robbie Elmers is a staff writer for Tech News Space, covering software, applications and services.

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