The price of bitcoin is falling! Why?

Introduced in 2009, Bitcoin reached its highest price in 2021, almost touching $70,000. But following this peak, its value has been literally melting away. This real “cryptocrash” comes after a decade of skyrocketing growth and brutally challenges the general public’s enthusiasm for cryptocurrencies. 

A Worrisome Economic and Geopolitical Environment for Crypto

The collapse of Bitcoin’s value in 2024 falls within an unstable global context, hardly conducive to risk-taking. Record inflation resulting from the post-Covid recovery and the war in Ukraine is leading crypto investors to turn towards safe-haven assets.

The prospect of a global recession in 2023, confirmed by the IMF, also weighs on the crypto markets. And the aggressive interest rate hikes decided by central banks are making credit more expensive, draining liquidity from speculative assets like cryptocurrencies.

A Series of Scandals Undermining Confidence

The collapse of FTX, considered as one of the safest crypto platforms in the industry, has exposed fraudulent practices and shattered confidence. Other major players’ bankruptcies have followed. 

These repeated scandals reveal a lack of oversight in the sector. They remind us that the extreme volatility of cryptocurrencies is not the only danger. Their opacity also makes it fertile ground for price manipulation and scams. In the face of these misbehaviors, many countries such as the United States are preparing for tighter crypto regulations. Especially to better protect amateur investors from the risks.

However, this prospect of increased state control is contrary to the libertarian ideology that underpins the movement. It decreases the speculative appeal of Bitcoin, which was designed as a decentralized asset, free from central banks.

Limited Bitcoin Adoption and Uncertain Economic Model

Beyond these episodic factors, the long-term viability of Bitcoin is questioned. The complexity of crypto payments limits their everyday use. And its enormous energy consumption for mining new bitcoins is concerning.

If Bitcoin survives this “cryptocrash,” it will have to prove its ability to integrate into the financial system over the long term. But also, its capability to truly serve as a credible alternative to traditional currencies. That’s a bet far from won.

Between generalized loss of confidence, regulatory tightening, and limited crypto adoption, Bitcoin faces in 2024 the most severe crisis in its history. It now has to prove its resilience and usefulness in the face of increasingly strong headwinds. Otherwise, the dream of decentralized virtual currencies could come to an abrupt end.