BTC has fallen by around 60 percent since topping $ 67,000 (£ 55,375) six months ago, to trade at around $ 28,000 at time of writing. The total crypto market, which includes other digital currencies such as Ethereum and Dogecoin, has lost more than $ 1 trillion (£ 830 billion) in value. This is not the end of Bitcoin’s troubles.
Bitcoin is still valued at around $ 1.3 trillion in total, but could continue to shrink as global volatility continues. So are we finally witnessing the death of Bitcoin?
Plenty of people will be happy to see Bitcoin vanish for good, given that it still offers little in the way of practical value, while mining the virtual coins on computers generates more greenhouse gas emissions than Bangladesh.
It has also fueled a get-rich-quick online trading culture, which has turned a handful of early investors into billionaires, and made millions of latecomers poorer.
BTC is now falling due to “the chaotic combination of interest rate hikes, fears of an imminent recession and military conflict in Europe”, says Sam Kopelman, UK manager of global cryptocurrency exchange Luno.
This could mark a long-term bear market for crypto, he said, and urged investors to resist the temptation to buy the current dip in the hope of profiting from a rapid recovery. “Bitcoin’s tumbling price may not be over just yet. Support may be found at $ 20,000. “
Yet Bitcoin has fallen sharply before only to cover just as rapidly, and it is too early to write it off yet.
Cryptos are falling for the same reason as other high-risk, high-reward assets. Because investors are getting nervous and unwilling to take many risks.
New York’s Nasdaq index of technology stocks has plummeted 30 percent this year. Tech growth stars such as Netflix, Facebook and Amazon now face a much tougher trading environment as recession fears grow.
Customers are being squeezed by the cost of living crisis, while borrowing costs are rising as central bankers hike interest rates to curb inflation.
READ MORE: Crypto CRASH: Bitcoin heading for record losing streak after collapse
The crash has destroyed one myth about Bitcoin, that it is now a safe haven in times of trouble. Or “digital gold”, as some called it. Instead, it’s fallen faster than almost any other asset class.
Two other historical safe havens, gold and silver, have also fallen, said Fawad Razaqzada, market analyst at City Index. “Like Bitcoin, they are struggling because they don’t give investors any interest or dividends.”
The crash is a tough pill to swallow for many younger investors, who have often big risks to gain exposure, said Myron Jobson, senior personal finance analyst at Interactive Investor.
Its research shows that crypto is the investment of choice for 45 per cent of 18-29 year olds. “An alarming number have funded this through credit cards and other forms of credit, leaving them with a double whammy of investment loss and debt, made worse by rising interest rates.”
They can only hope that Bitcoin will recover, Jobson says. “Crypto evangelists will point out that the market has fallen before then skyrocketed to record highs, but as interest rates rise and the economy slows, we are in a different world.”
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One global stock market has shrugged off the global slowdown to hold steady this year, the UK’s very own FTSE 100.
Blue-chip stocks on the index, such as BP, Lloyds, Persimmon, Unilever and Vodafone pay some of the most generous dividend income in the world, protecting investors against inflation.
The FTSE 100 is down less than 5 per cent year-to-date, which is good news for millions of Britons with money invested in pensions and stocks and shares Isa. In contrast to Bitcoin speculators, they have been shielded from the worst of this year’s crash.
It is quite a turnaround to see the boring old FTSE smash futuristic crypto.