Why Bitcoin’s Price is Rapidly Dropping

January was a difficult time for crypto investors as Bitcoin experienced a major drop and reached $35,000. It was a major setback for any type of trader from active trader to investor. Bitcoin experienced a major drop after reaching above $60,000 in April.

Many investors are hesitating to reinvest in the market. Because of this drop, other cryptocurrencies also noticed a major drop. Market analytics didn’t expect this major drop. In fact, they were encouraging investors to invest because of the healthy market conditions.

So, what happened? Why did the market experience a huge drop? If you are wondering why, then you are in the right place. Below we will discuss reasons, why Bitcoin experienced, are rapid drop from all-time high price value.

Bitcoin Price is Rapidly Dropping

Since Bitcoin is a highly volatile market, predicting the actual reason for the drop is difficult. There is a wide range of factors that influences the market. So, it is just an assumption because these incidents took place while the market was collapsing.

The major reason why the market dropped is the strategy change in the Biden administration. Many unidentified sources claimed that the Biden administration is developing a new policy regarding challenges in:

• Economy
• National security
• Regulatory

As a result, many investors unsure about the new policies withdraw their digital assets. However, when the Biden administration announced its strategy on February 2^nd, 2022, the market is shifting to a bullish trend.

The rumors before the policy announcement forced many Bitcoin holders to withdraw their assets and wait for the right moment to invest. As a result, Bitcoin dropped from $68,000 to $37,000. This is nearly a 50% drop. Because of this drop altcoins influenced by Bitcoin also dropped.

Another influencing factor is the U.S. Federal Reserve. Jerome Powel, the Chair of the Federal Reserve suggested in December 2021 that FOMC or Federal Open Market Committee will reduce the assets purchases by half every month. Today, Federal Reserve is buying U.S. Treasury securities at $20 billion and reducing at $10 billion every month.

While these changes in policies negatively influenced the cryptocurrency market, development to inflation will reduce inflation and improve the market.

Should Bitcoin Investors Panic?

Bitcoin investors should not fret about the recent Bitcoin price drop. However, they should stay alert about the factors that influence the cryptocurrency market. Also, they should notice every rumor and government policy and always set stop loss.

If you have little knowledge about the influencing factors, you won’t be able to make the right decision at the right moment. Also, you should consider monitoring developments regarding Bitcoin and other huge financial markets.

Conclusion

Since February 4^th, 2022, Bitcoin’s price is rapidly increasing with new hope for investors. It has reached more than $44,000 now. This is a good sign for cryptocurrency investors and traders. Always use market indicators and signals to make buying and selling decisions. Also, follow huge market influencers such as government officials and world leaders to predict the market direction.