Bitcoin Loses 2022 Gains and Falls Below $30,000

“Bitcoin’s correlation with the Nasdaq, the high-tech U.S. stock index, is “at an all-time high,” blockchain analysts at Kaiko note. (Photo: Getty Images)

LONDON – Bitcoin, the main cryptocurrency, lost some of its gains over the past few months in May and its price briefly fell below $30,000 on Tuesday as investors fled risky assets amid the uncertain backdrop of the war in Ukraine.

At $29,764, its lowest level on Tuesday, bitcoin traded at a level not seen since July and is down 57% from its all-time high hit in November 2021.

The recession means that the vast majority of funds and people who own bitcoins bought last year are now incurring losses.

Other cryptocurrencies are no better: the total market is valued at just over $1,500 billion, compared to $3,000 billion at its peak, according to Coingecko, a website that lists over 13,000 cryptocurrencies.

To (re)read: “Bitcoin is a great way to protect your savings”

The sector’s failures are due to increased caution by investors concerned about the war in Ukraine, restrictions in China and tightening of monetary policy in the United States.

dark tech

As a result, they are pulling out of stock markets, and especially tech stocks, whose performance has been boosted by easy money from monetary policy during the pandemic, as well as long-term growth bets.

However, “Bitcoin’s correlation with the Nasdaq,” a US stock index with a strong tech tone, “is at its highest,” note Kaiko blockchain analysts.

However, it is difficult to say in which direction Bitcoin will develop, since the volatility of crypto assets has been proven.

In 2021, Bitcoin temporarily fell below $30,000 twice, in June and July, before rising again, hitting its all-time high a few months later in November.

And despite a less impressive 2022 in terms of prices, some sector players are keen to keep up with increasingly demanding authorities. One of the largest marketplaces, Binance, received permission to operate in France from the Autorité des Marchés financiers (AMF) in early May.

In the United States, the stock market policeman (Securities and Exchange Commission, SEC) has announced that it is strengthening its team in charge of regulating cryptocurrencies.

Confident El Salvador

As a sign of the importance that cryptocurrencies have acquired over the past two years, two countries, El Salvador and the Central African Republic, have even taken it upon themselves to adopt bitcoin as their official currency despite harsh criticism from international financial institutions.

If the Central African project is still in the draft stage, El Salvador’s president, Nayib Bukele, proudly announced on Twitter on Monday that “El Salvador bought the dip” by adding 500 bitcoins to its bottom, adopting the vocabulary of stockbrokers who see the price of an investment opportunity drop.

On Tuesday, he was pleased to see bitcoin rise (+2.3% to $31,695 around 5:25 am Québec time). But since its inception in 2009, the cryptocurrency has existed in conditions of ultra-low rates.

Instead, the US Federal Reserve (Fed) has signaled in recent months that its recent rate hikes will be reinstated to stem inflation.

“Temporary bounces are possible, but as long as government bond yields rise and the dollar rises” due to the Fed’s determination, “an even sharper decline is the main risk” for cryptocurrencies, warns Fawad Razaqzada, an analyst at City Index.


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