Bitcoin (BTC) has had a rough start to the new year, dropping below $40,000 for the first time since August 2021.
The world’s most valuable cryptocurrency by market capitalization fell 4.2 percent in the last day, momentarily touching $39,866.71; it has subsequently rebounded somewhat to just beyond the symbolic $40,000 barrier.
Since January 1, 2022, Bitcoin has lost around 14% of its value. The flagship cryptocurrency has plummeted by 41% since its all-time high of $69,000 in November of last year.
Simultaneously, the price of Ethereum (ETH) dropped below $3,000 on Monday, reaching depths not seen since September of last year.
According to CoinGecko data, the industry’s second-largest cryptocurrency has lost 4.8 percent of its value in the last 24 hours and as much as 21.5 percent in the last week.
At press time, Ethereum was trading at $2,950, down from a daily high of $3,227. Ethereum reached an all-time high of $4,878 just two months ago on November 10; however, recent price activity shows that the commodity has lost 38% of its value since then.
Despite the adverse circumstances surrounding Ethereum, the non-fungible token (NFT) market has continued to grow.
For example, the top NFT marketplace OpenSea just had its second-best month in terms of transaction volume last week. Its most recent funding round valued the company at $13.3 billion.
Bears tackle Bitcoin
There are a variety of reasons why Bitcoin may have gotten off to a shaky start in 2022, ranging from upheaval in Kazakhstan to controversial Crypto.com commercials to Federal Reserve decisions.
Despite the fact that we are only a few weeks into the new year, Bitcoin has already sparked debate.
Political upheaval erupted in Kazakhstan on January 2, 2022, in the town of Zhanaozen, after the government relaxed a price cap on liquefied petroleum gas, causing gas prices to nearly treble.
The ensuing turmoil was met with a statewide Internet outage, which apparently knocked off a large portion of the world’s Bitcoin miners. As a result, Bitcoin’s price has been steadily declining throughout January.
On January 5, the Federal Reserve of the United States (Fed) announced that it may speed up the pace of interest rate hikes. This essentially indicates that the Fed will stop printing money and instead raise borrowing costs in order to keep inflation under control.
After the news emerged, the price of bitcoin, Ethereum, and the entire crypto market value all dropped.
For the first two weeks of the new year, unrest in Kazakhstan and interest rate hikes may be plenty, but it doesn’t end there.
The mainstream discovered Crypto.com’s Matt Damon ad, which has been airing since October, throughout 2022’s brief existence.
The rest of the world was unimpressed.
On January 3, Guardian writer Carole Cadwalladr wrote, “There isn’t enough icky in the world to describe Matt Damon advertising a Ponzi Scheme.”
Crypto critic Stephen Deihl remarked, “I just can’t get over the unadulterated nihilism that indicates investing in dog coins is like investing in the moon landing.”