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If you're wondering, "What's happening to bitcoin?" You're not alone. Bitcoin is a very hot topic right now, and everyone wants to know why. The current price decline is a result of global economic trends and the emergence of new cryptocurrencies, such as TerraUSD and El Salvador's legal tender. But there are several other factors contributing to the downfall of Bitcoin. Read on to learn more about these factors and what they mean for the price of bitcoin.
Traders, investors, and financial professionals alike are concerned about the volatility of the Bitcoin price. Its limited supply and volatility have influenced its price dramatically, causing it to spike and drop dramatically in the same day. Inflation, a situation when the money supply increases rapidly, causing prices to rise and reducing the value of a currency, also has an effect on Bitcoin. But because of its limited supply, Bitcoin is safe from hyperinflation. Hyperinflation is a financial crisis that has destroyed the value of many fiat currencies.
In April 2011, Bitcoin broke the $1 mark and rose by nearly three-fold in just three months. In June 2011, bitcoin reached an all-time high of $32, but soon crashed and finished the year at a low of about $2. Although it has recovered in 2019, it hasn't yet reached its peak from 2017, and hasn't reached it yet, the price of Bitcoin is likely to rise dramatically in 2020 and 2021. Coindesk reports Bitcoin prices in US dollars, but this information is not indexed to inflation.
Global economic trends are a major influencer of the price of bitcoin, and many investors are speculating on the future of the cryptocurrency. Global GEPU is increasing, and Europe is grappling with immigration issues from war-torn countries. This causes uncertainty about the future of the European economy, and has a negative effect on trade. During periods of rising global GEPU, Bitcoin prices tend to be stable.
On the other hand, there are many countries that have mismanaged their domestic currencies. The authoritarian regime in Venezuela, for example, has a history of sky-high inflation that has resulted in an edgy economy and a plummeting standard of living for its citizens. The current inflationary environment is a testing ground for bitcoin, and a higher dollar value would strengthen the currency's appeal.
The $60 billion TerraUSD project has destroyed the crypto market. Many investors thought it would revolutionize payment systems by creating a stablecoin pegged to the U.S. dollar. As it turns out, the project was a fraud, as investors panicked and wiped out their funds in days. The resulting bank run wiped out many investors, pulling down the entire crypto market. The Wall Street Journal reported on the situation of some investors.
But in the following weeks, the price of Luna soared, reaching $116 in April. Just three weeks earlier, it was trading for under a dollar, making many investors billionaires. The crypto currency's popularity spawned a retail trading community, including Bitcoin millionaire Mike Novogratz. Mr. Kwon, who founded TerraUSD, announced his support by getting a Luna-themed tattoo. Moreover, the start-up behind the new cryptocurrency Luna launched a cryptocurrency exchange and a lending service called TerraUSD 2.0.
While the world's central banks are often hesitant to support Bitcoin, the government has made it a legal tender in El Salvador. The decision likely stems from the country's adoption of the US dollar in 2001, and some citizens perceived the new currency as a financial hardship. However, the country's new legal tender may prove to be a boon for Bitcoin. Ultimately, El Salvador's decision will likely spur further adoption of the currency in the country.
Some analysts fear that El Salvador's adoption of Bitcoin could encourage money laundering. While many experts disagree, the adoption of Bitcoin as legal tender in El Salvador could reduce the likelihood of sanctions imposed by the U.S. Treasury. In addition, some analysts believe that Bitcoin adoption could help alleviate the financial burdens faced by a country with a huge unbanked population. Ultimately, it is up to the government to determine how to deal with the situation and make the best possible decision for its citizens.
Although the UK and EU are at odds on the regulatory issues surrounding cryptocurrency, there are signs of a shift in Australia's attitude toward the currency. Both countries have embraced cryptocurrency exchanges and have taken a more friendly stance than their regional counterparts. The Australian Taxation Office, or ATO, treats cryptocurrencies like goods and collects tax on them using the Goods and Services Tax, or GST. Furthermore, the Monetary Authority of Singapore recently clarified that digital assets such as bitcoin and other cryptocurrencies are securities.
In a recent speech, the CEO of Microstrategy, Michael Saylor, explained that regulatory clarity will help bitcoin continue to grow as the number of participants increases. Increasing government regulation will also facilitate institutional participation and accelerate growth in the cryptocurrency space. This, in turn, will allow more traditional banks and public companies to get involved, thereby further expanding the market. So, what does this mean for the future of Bitcoin and other cryptocurrencies?
