Mysterious reasons behind the decline of cryptocurrencies
Bitcoin, the largest cryptocurrency by market cap, fell over the past week by more than 20% to $42,000 at midnight EST on Saturday before recovering somewhat, according to market data. By about $49,200 on Sunday evening, it is still down about 8% since late Friday and down about 14% since the beginning of the month.
The declines were widespread, as other widely traded cryptocurrencies including Solana, Dogecoin and Sheba, at one point, lost more than a fifth of their value.
Ether, the second largest cryptocurrency, also fell late Friday, but wiped out nearly all of those losses by Sunday.
Bitcoin and other cryptocurrencies are notorious for their volatility, often dropping for mysterious reasons.
The Wall Street Journal quoted Noel Atchison, head of markets at Genesis Global Trading, as saying that “there is another possible factor that accelerated the sale of (Bitcoin) other than concern about the new (Corona) mutation, which is the dismantling of crypto-currency derivatives with Great leverage.
Leveraged cryptocurrency derivatives trading has become a huge business for trading platforms such as Binance, the world's largest, as traders use futures contracts to bet on the rise or fall of a particular currency.
To make the returns more attractive, they are allowed to make high-volume bets with little money.
And when the price of cryptocurrencies drops sharply, margin calls force investors to liquidate.
Bitcoin's price swung later on Saturday after El Salvador's President Najib Bukila, whose country adopted Bitcoin as its national currency in September, said in a tweet on Twitter that the country bought 150 coins at an average of $48,670 each.
This is not the first time that El Salvador has entered the market after a significant drop in prices, as the interventions of the proxy of its small poor country have turned into an informal central bank that supports digital currency, similar to the way in which major central banks intervene in foreign exchange markets to maintain currency stability. .
And cryptocurrencies move much more than stocks or government-issued currencies.
The week was a lively stock market ride, as investors were uncertain about the course of the pandemic and inflation.
The omicron mutant has sparked new restrictions around the world, just as travel is beginning to rebound.
Scientists are also trying to determine the effectiveness of current vaccines against "Omicron".
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