Bitcoin Falls Below US$30,000 for the First Time since July 2021
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Bitcoin Falls Below US$30,000 for the First Time since July 2021

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Antonio Gozain By Antonio Gozain | Senior Journalist and Industry Analyst - Tue, 05/10/2022 - 13:00

This Tuesday, bitcoin tumbled below US$30,000 for the first time since July 2021 amid interest rate increases and a market trend to get away from risk assets due to the uncertainty brought by the Ukraine-Russia conflict.

Bitcoin fell as low as US$29,730 in Asia trading on Tuesday before recovering to about US$32,000 in EU activity, reported Financial Times. The digital token has fallen more than 50 percent from the high it reached in Nov. 2021. Similar digital assets have also seen heavy pressure in recent weeks, pushing the market value of the Top 500 digital assets down by half from the record reached in Nov. 2021 to US$1.6 trillion, according to CryptoCompare data.
The crypto market flourished thanks to the pandemic, impacting every financial product from the stock and commodities markets to the cryptocurrency market, reported The Economic Times. Bitcoin became one of the highest valued assets of 2020, rising over 500 percent in six months. Other cryptocurrencies such as Ethereum, Ripple and Dogecoin also performed well.

During the pandemic, central banks pushed interest rates to record lows, sending traders hunting for assets that provide strong returns, reported Financial Times. However, “a big sell-off in global government bond markets this year has pushed yields higher, amping up the potential returns investors can earn from holding high-grade debt.”

While other risky assets such as shares in lossmaking companies have also come under pressure, cryptocurrencies have seen a particularly intense blow, said Daniel Ives, Managing Director, Equity Research, Wedbush Securities. “This is a risk off across all asset classes including crypto. [There is] nowhere to hide.”

In Mexico, 12 percent of the adult population owns a cryptocurrency, ranking the country in ninth place for the largest cryptocurrency possession rate in the world, as reported by El Economista. Bitcoin is the most popular digital asset in Mexico, with more than half of crypto owners investing in the digital currency. Ethereum and Binance Coin are the second and third most popular cryptocurrencies in the country.

As cryptocurrencies become increasingly popular in Mexico, users need education in the topic, said to MBN Bárbara Garza, Country Manager, Buenbit: “There is already a certain degree of adoption of cryptocurrencies (15.2 percent of internet users in Mexico own crypto), which is a good introduction. Anyhow, we still have to continue working on educating users, which has been one of the biggest challenges we faced.”

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