After Failing at US$27k, Bitcoin Finds Resistance at US$24k  

Why is Bitcoin crashing? This is one of the big questions on the minds of crypto investors and traders

The current slide of Bitcoin (BTC) and other cryptocurrencies is being caused by a combination of short-term and long-term inputs, including larger financial markets and the crashing of a major stablecoin. Crypto investors have long hoped that the independent nature of crypto would make it resistant to inflation and crises. Bitcoin, the number one cryptocurrency, has no central issuer or authority controlling it. That independence from government, many argued, should ensure that Bitcoin would hold its value through economic dips, international wars or drastic policy changes.

But the last couple of years have proven this false. When the coronavirus pandemic crushed global markets in March 2020, so too fell Bitcoin, falling by 57%. Stock markets and cryptocurrencies then recovered and rose at a staggering rate, which analysts believe was caused by a combination of free time, disposable income, and pandemic-relief money pumped into the world by governments. With BTC dropping below 30,000, the gains made over the past few days were wiped off. Altcoins also registered a decline in the prices.

Some crypto investors also believe that TerraUSD (UST), one of the largest stablecoins, played a role in Bitcoin's crash earlier this month. UST is intended to be pegged to the U.S. dollar but it sank as low as 12 cents and collapsed in a pseudo-bank run as investors panicked and sold off their tokens. Last week, Terra relaunched a new version of its failed Luna cryptocurrency, but not UST.

BTC hasn't been above US$50,000 since December 25, 2021. Despite the ups and downs, Bitcoin has stayed above its January low point below US$34,000, which was the lowest it had been in the previous 6 months. Bitcoin's price has seen a 40% drop in value since its all-time high above US$68,000 on November 10, set back by surging inflation, lagging recovery in the job market, and the Fed's ongoing signals that it would begin winding down pandemic measures to support the economy. Bitcoin's price has been between US$27,000 and US$31,000 so far this week.

For some time, BTC and other crypto-assets would go in the opposite direction of the stock market. If the market crashed, the digital assets would go up, like one side of a scale pushing another in the opposite direction. But as these financial systems have been braided together over the past year, what goes down, now goes together. Everything is becoming entangled into one giant, messy minestrone financial soup. Many mutual funds, hedge funds, mom-and-pop investors, and venture capitalists have huge stakes in the crypto-world. And the volatility is seeping in from one universe to the next. Unlike massive crypto sell-offs before, these assets are now increasingly being tied to the S&P and Nasdaq, which are informing what happens to the Dow on and on. And while virtually all markets have plummeted in recent weeks, few areas have suffered as abruptly as tech stocks, which were once darlings of the investing world. Tesla is down about 26% compared to a month ago, for example, Apple is down about 17%, and Amazon is down a staggering 30% in the same period—just to name a few. (One of the biggest and most-talked-about drops, next to Coinbase, has been Shopify, which has seen about 80% of its value wiped out in the past six months.)

Should you still consider investing in Bitcoin? Yes, here are multiple reasons why:

Less Exposure to Inflation

Bitcoin is a Cryptocurrency that is not much exposed to inflation. The value of currencies appreciates and depreciates because of inflation, which is not the case with Bitcoins. They are affected by other factors that keep the economy going. This reduces your tension about the effect of a rise in inflation because we all know that inflation will go up in the coming years.

Safety

Since Bitcoins are something that can not be stolen and are kept in a digital wallet, it makes it easy for you to keep track of your Bitcoins. The current owner of the BTC can only transfer the ownership of the Bitcoins, and that should make you tension-free about the ownership of your Bitcoins. Simple physical access to the owner's computer is not going to help the person trying to steal it. This way, your Bitcoins can be safe for as long as you want them to.