Bitcoin slips below $20,000

Bitcoin slips below $20,000

Is cryptocurrency a good protection against inflation? Bitcoin still owes proof of this. Most recently, the cryptocurrency fell back below the $20,000 mark.

Last night, bitcoin once again had to give up the psychologically important mark of $20,000, which it has been struggling with since the summer. At the moment, the most important cryptocurrency is falling by a good five percent to $19,700. Other major cryptocurrencies, such as Ethereum, are also under similar pressure.

“The US midterm elections and inflation data are curbing the risk appetite of market players, as major surprises cannot be ruled out,” commented crypto expert Timo Emden from Emden Research. “No one wants to be caught on the wrong foot right now.”

Interest-free investments are becoming less attractive

Cryptocurrencies are, therefore, still understood by market participants as a risky investment, the development of which is strongly determined by the general willingness or aversion to risk on the financial markets. Moreover, in view of today’s midterm elections and the inflation data from the United States due on Thursday, the uncertainty as to how the US Federal Reserve will proceed with its interest rate hikes is weighing on the courses.

The rapidly rising interest rate level in the USA makes interest-bearing investments in dollars comparatively more attractive. Interest-free forms of investment, such as Bitcoin, are at a disadvantage.

So far no real protection against inflation

Cryptocurrencies are actually considered the classic departure from state currencies – and thus also natural beneficiaries of inflation. But Bitcoin has so far failed to provide proof of this. So, even if the loss of confidence in the established currencies is palpable every day, cryptocurrency has so far been unable to benefit from it.

The cryptocurrencies were also unable to live up to their supposed function as a “safe haven” this year. Since the beginning of the Russian war of aggression in Ukraine at the end of February, which brought about considerable geopolitical uncertainties, the Bitcoin price has roughly halved.

A year ago, Bitcoin was at record levels and briefly touched the $70,000 mark. Yet, even in view of the price slump that followed, the virtual means of payment have so far not been able to create any lasting trust and, after a phase of high public attention, have slipped out of the media focus again.

Read also: The end of a start-up hope?

Economy Editorial Team

Economy Editorial Team

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