It is a mix of several factors that is currently threatening the cryptocurrency market: payout freezes and insolvencies on crypto platforms, hacker attacks, concerns about inflation and interest rates, and rising electricity costs. Yesterday, Friday, the price of the oldest digital currency Bitcoin fell to around 21,000 euros, continuing the downward trend of the past few weeks. Bitcoin and the second most important cryptocurrency, ether, have lost around two-thirds of their value since November.
“There are currently good reasons for investors not to invest in crypto in the short term,” said Philipp Sandner, head of the Blockchain Center at the Frankfurt School of Finance, the “Handelsblatt”. He warned that another Bitcoin price fall is imminent this month. The industry has been criticized primarily because of the high energy consumption that occurs during the production of digital currencies, the so-called “mining”. Major corporations in the US mining industry slipped deep into the red in the second quarter. Electricity prices and inflation are forcing companies to dump mined bitcoins on the market to cover running costs and interest payments. Some operators in Texas partially shut down their mining farms due to power shortages caused by a heat wave.
Waiting for Biden decision
Many investors are also nervous about the fact that their digital money is gone if it is stolen, for example by a hacker attack, because there is no protection. This year alone, such attacks have caused damage of 2.1 billion US dollars in the crypto industry, according to figures from the analyst Chainalysis.
The industry is also eagerly awaiting how the US government will deal with cryptocurrencies. President Joe Biden is not considered a supporter. In the coming weeks, the government plans to announce how it intends to regulate digital currencies.
Source: Nachrichten
