Bitcoin has lost more than half its value this year, and plunged below $18,000, its lowest level in 18 months.

The 8 largest digital currencies by market capitalization also recorded combined losses of about $1.6 trillion, amid severe turmoil in the cryptocurrency markets.

The decline prompted many investors to exit any risky investments, including digital currencies, and to be keen to enhance savings.

This wave of major losses is the longest of its kind ever that afflicts these days in digital currencies;

The market value of these currencies plunged last week only to $800 billion, compared to $3.2 trillion in mid-November.

It was not only Bitcoin that suffered significant losses, but Ethereum - which constitutes the second largest cryptocurrency - has also fallen by 73% this year.

 Why cryptocurrency collapsed?

The decline of digital currencies is due to:

  • Investors are acutely concerned about investing in all risky sectors.

  • This concern was exacerbated by most of the world's central banks raising interest rates due to the rise in global inflation rates to record levels.

  • The losses of these currencies were exacerbated after the Chinese government banned financial institutions and payments companies from providing cryptocurrency services.

  • The major global problem at this level is that the countries of the world implement completely different strategies in the field of digital currencies.

  • Also, many encrypted service providers operate across borders, without restrictions, which makes monitoring them difficult.


What did the IMF say about dealing with cryptocurrencies?

The International Monetary Fund said that there are several things that must be adhered to when developing a global financial system for digital currencies and to reduce their violent volatility, including:

  • The imperative for crypto asset service providers to have official licenses.

  • Subject cryptocurrency exchanges to the same rules as global exchanges of all kinds.

  • The inevitability of central banks' supervision of those currencies.

  • The necessity of establishing regulatory bodies working in investment companies, banking sectors, insurance and pension institutions;

    Putting special conditions when dealing with those currencies.

The Fund says that this is very fundamental because these digital currencies may be on the way to fundamentally change the international financial and monetary system.

Cryptocurrency market turmoil

The cryptocurrency market was affected by extreme volatility with cryptocurrency lender Celsius Network freezing withdrawals early last week, after investors began dumping risky assets on fears of a massive Federal Reserve interest rate hike to curb rising inflation. .

Bit Oasis (a Middle East-focused cryptocurrency exchange based in the UAE) said Sunday that it has laid off 9 of its employees, becoming the latest company in


the sector to cut jobs in the face of downturn and market turmoil.

And Coinbase Global announced last Tuesday that it will cut its workforce by 10% by 1,000 jobs.