The cryptocurrency market continues to suffer losses after a strong performance last month and the first few weeks of this month. Bitcoin (BTC), the cryptocurrency with the largest market capitalization, recorded losses of nearly 7% in the middle of the trading day on Tuesday, and its price is hovering around $62,000 per unit.
The fall in Bitcoin’s price is linked to the largest single-day outflow of exchange-traded funds. This drop in Bitcoin’s price precedes the Federal Open Market Committee meeting by a day, an event closely watched by investors for potential impacts on market liquidity.
Analysts specializing in cryptocurrencies estimate that the value of BTC could continue to fall and that the prices of other major cryptocurrencies could also be affected.
Additionally, some analysts speculate that the market may be reaching a saturation point or is adjusting in anticipation of the Bitcoin Halving event next month, which historically influences Bitcoin’s value by reducing the reward for mining new blocks. The truth is that during today’s trading day, the cryptocurrency market recorded that more than 230 billion dollars disappeared from the total market capitalization of cryptocurrencies.
Bitcoin, the most important cryptocurrency
Bitcoin, the first cryptocurrency to hit the market, was created by Satoshi Nakamoto in 2008 after the financial crisis. This digital currency aimed to promote the ideal of financial freedom and wanted to challenge traditional financial institutions.
Also known in the market by its acronym BTC, Bitcoin employs cryptography to secure transactions and control the creation of new units, ensuring a decentralized management system free from central bank regulation.. This means that it cannot be regulated by any financial institution, which sometimes makes the cryptocurrency market volatile.
Despite the progress that Bitcoin and other cryptocurrencies such as Ethereum have made, important organizations such as the International Monetary Fund, the World Bank, and the Inter-American Development Bank still have doubts about the benefits that cryptocurrencies can offer.
Likewise, despite the skepticism, there are those who have bet on Bitcoin. For example, El Salvador became the first country to accept this cryptocurrency as legal tender on June 9, 2021. Contrary to some claims, Honduras has not officially adopted Bitcoin as legal tender..
Historic influx of investments drives bitcoin to all-time highs
On March 12, Bitcoin had reached a new all-time high, reaffirming its position as the most valuable cryptocurrency on the market, approaching $73,000. This record was set amid unprecedented inflows into cryptocurrencies.
The increase in the value of Bitcoin is happening in an environment where there is a massive influx of capital into cryptocurrencies, indicating a growing interest in investing in this asset class. Reflecting growing interest in digital currencies, there are reports that Japan’s largest pension fund is exploring the possibility of investing in Bitcoin. Additionally, there are discussions within the Japanese government about proposing legislation to enable investment funds to hold digital assets, including cryptocurrencies.
If this happens, it would be a major step towards the adoption of cryptocurrencies both in Asia and globally.
