After a historic surge in price, Bitcoin’s value dropped on Wednesday after the Federal Reserve announced that no adjustments would be made to the Federal Funds rate in May. At the end of March, Bitcoin’s price hit a historic high of $69,919 and has since fallen to $57,841. Here, we will look at other Bitcoin price drops and what drove the value of the most popular cryptocurrency down during those circumstances.
The drivers of the 2022 Bitcoin price tumble
In 2022, Bitcoin’s price fell to its lowest level when it was driven down to $16,500 from a high of $64,000 around a year earlier.
When this dramatic fall occurred, the crypto world witnessed the collapse of the non-fungible tokens (NFT) market. The demand for NFTs dropped after many in the market began to see that they could not hold value as well as other cryptocurrencies, making them less desirable investments. While Bitcoin can be purchased in extremely small units, an NFT must be bought at its total retail value, which can reach the million-dollar mark. In 2022, an NTF of the first Tweet sent by Twitter founder Jack Dorsey was sold for $2.9 million, and the current owner, who was looking to sell the asset, could not mind a buyer willing to spend more than $12,000.
However, those who have been investing in Bitcoin are not safe from major declines in the value of the market. Compared to this time last year, the value of Bitcoin has decreased thirty-three percent, falling to $30,772 from more than $47,000. This does not account for the crypto hitting a record high in November at more than $64,000.
This is not the only major sell-off event Bitcoin has seen recently. From 7 May to 16 July 2021, the price of one bitcoin fell from $58.958 to $31,576.
Just today, the price dropped by six percent after troubles in the crypto marketplace began to impact investor preference for Bitcoin.
Other major drops in Bitcoin’s price seen over the last decade
The pandemic brought cryptocurrency to a new space as many were stuck at home, and the prospects of digital wallets and e-commerce gained new followers. However, tides are changing, with Josh Lim, head of derivatives Genesis Global Trading, reporting that those selling now are mostly “long holders.” This could mean that early investors in Bitcoin are losing confidence in the product and selling off now to cut future losses.
This is not the only major sell-off event Bitcoin has seen recently. From 7 May to 16 July 2021, the price of one bitcoin fell from $58.958 to $31,576.
The largest decrease, as a percent of the coin’s value, occurred in 2011. In June 2011, Bitcoin’s value started to surge from $2 to $32 rapidly. Towards the end of the month, on 19 June, Mt. Gox, the largest Bitcoin exchange in the world at the time, announced that the platform had been hacked and that millions had been stolen. Quickly, the price of the crypto dropped to a single penny.
2018 was also a challenging year for Bitcoin. Between December 2017 and December 2018, the crypto saw its value decrease by eighty-four percent. The sell-off came after Bitcoin had reached $20,000, which startled some investors who believed that a bubble was forming in the market. While some investors were able to cash in, the coin saw a decrease in value to correct for any speculative pricing. Additionally, around the same time, some countries like South Korea and Japan were considering banning Bitcoin, which made some investors skeptical of the promise that accompanied cryptocurrency.
