Earlier in May this year, the collapse of stablecoin Terra has also been witnessed. Although this new mode of investment had seen many periods of decline before, coming out of those declines,

 

it showed a spectacular boom. But the present crisis is different from the past in many ways because the collapse of FTX is due to structural flaws. The result is that most experts now agree that the cryptocurrency bubble has burst and that the golden age of this digital investment vehicle has little chance of returning.

 

What is the Current Status of Cryptocurrency-

Bitcoin Price Graph 2013-2022 Bitcoin Price Graph 2013-2022[/caption]

 

 

The world’s most popular cryptocurrency bitcoin price reached a record high of $69000 on November 10 last year.

 

But after that, it declined significantly, and on 16 November 2022, it was trading at around $16600.

 

In this way, the price of bitcoin has fallen by more than 72 percent in 1 year. According to the cryptocurrency tracking website coinmarket.com, according to Market Cup

 

Since then, the share of bitcoin in the cryptocurrency market is about 37 percent. The second largest and most popular cryptocurrency, Ethereum, has a market share of about 17 percent in the cryptocurrency market.

 

Its price also reached its all-time high of $4,878.26 on November 10 last year. While it is currently around $ 1,215. The condition of Dogecoin, the favorite cryptocurrency of Elon Musk, who recently bought Twitter, was also not doing well. In the last year, about Almost 44 percent growth has been seen in a month.

 

Why there was such a rise in cryptocurrency?

 

Why there was such a rise in cryptocurrency?

Why there was such a rise in cryptocurrency?

 

 

Ever since 2020, especially since institutional investors started investing in the crypto market, especially bitcoin, the prices of cryptocurrencies started climbing like a rocket.

 

In the greed of rising crypto prices and getting rich overnight, even those who did not even have a basic understanding of crypto put money in crypto.

 

At that time there was also a period of falling interest rates, as well as uncertainty about the economy and other asset classes (both risky and risk-free), which increased the interest of institutional investors as well as general investors in cryptocurrencies.

 

As a result, the price of cryptocurrencies went up to record highs. By the way, the crypto market moves only on the possibility that the price will increase further in the coming times. Former RBI governor Raghuram Rajan also compared cryptocurrency to unregulated chit-funds in November last year.

 

He had said that if anything has value only because it can fill the value in the coming time, then it is actually a bubble.

 

Two main reasons for the sunset of crypto:-

 

Increase in interest rates – After the recovery from Corona, inflation started increasing rapidly at the global level. As a result, the central banks of various countries began to strengthen instead of softening the monetary policy. The process of increasing interest rates has started. On November 2, the US Federal Reserve not only announced a 0.75 percent hike in interest rates for the fourth time in a row but also indicated that it would maintain its stance on monetary policy. Central banks of other countries are also continuously increasing interest rates. Because of this, instead of crypto and other risky asset classes, the interest of institutional investors in risk-free asset classes such as government bonds started increasing. The fear of recession is also deepening. So bearish inflation has left the crypto market breathless.

 

Strictness towards crypto -The way various countries are being strict about cryptocurrency at the global level, the enthusiasm of investors regarding the crypto market has cooled down. China has completely banned the mining and transactions of cryptocurrency, while there is no such thing as a ban in India, but in the last budget, a provision of 30 percent tax has been made on the income from cryptocurrency. Along with this, a fee TDS has also been imposed on the purchase and sale of cryptocurrency above ₹ 10000. Due to this the crypto market has got a big blow.

 

What is cryptocurrency?

 

Cryptocurrency

Cryptocurrency

This is a digital i.e. virtual currency, this virtual currency has been made from blockchain technology that works on the principle of cryptography. For this reason, it is called cryptocurrency. When you talk about fiat currency i.e. the sovereign currency of a country i.e. Rupee, Dollar, Yen, Pound, then it is issued by any government or any regulatory authority like the Central Bank.

 

How much and when this currency will be printed is decided by looking at the economic condition of the country. But no one has control over cryptocurrency.

It is a completely decentralized system. It works on the distributor system. Which can neither be hacked nor tampered with in any way. The value of a cryptocurrency depends on the expectation that others value it and how much it is used.

Cryptocurrencies also do not fit the historical concept of money, as they have no intrinsic value. Some people believe that it is like gold but this is also not true because like gold it is neither a commodity nor has any aesthetic value.