Investors in bitcoin are losing more and more money as the cryptocurrency’s price continues to drop, falling below $32,000 on Tuesday.
Bitcoin and other cryptocurrency values, mirroring the downward trend that overtook markets after the Federal Reserve .
Rattled by the latest dips in the stock market, many investors have rushed to dump their bitcoin and other volatile digital currencies in favor of more stable investments like U.S. Treasury bonds, some crypto watchers said. There were almost 43,000 requests to buy or sell bitcoin placed on crypto exchanges last week, representing roughly $3.1 billion worth of bitcoin, according to data from blockchain analysis firm Glassnode.
“This is the highest influx in transaction activity since mid-October 2021 when we started tracking,” Glassnode analysts said in their report published Monday. “This further supports the case that bitcoin investors were seeking to de-risk, sell or add collateral to margin in response to market volatility.”
The Glassnode report also found that the investors who ditched their bitcoin paid a combined $119,000 in fees on crypto exchanges for the transactions and that about 15.5% of bitcoin wallets have suffered unrealized losses over the past month.
Considered highly unstable by some financial experts, bitcoin reached its highest price of $68,000 last November, in part because more companies like PayPal, Etsy and Whole Foods began accepting it as a form of payment. The world’s largest and most popular crypto is now down 49.5% from its November high, Glassnode said. As of Tuesday afternoon, it was trading at around $31,600.
Bitcoin’s price is falling even though well-known financial institutions are starting to use the digital asset. Fidelity Investments announced last month that it’sin 401(k) accounts. Goldman Sachs lent out money last month that was backed by bitcoin, a first in the company’s history.
Analysts said they still believe the crypto is an ideal buy-and-hold investment. Edward Moya, senior market analyst at Oanda, said last week “there’s a lot of” for investors who hold on to their bitcoin.
The drop in bitcoin’s price has nothing to do with things happening in the crypto world, said Mauricio Di Bartolomeo, who runs Ledn, a bitcoin-lending service in Toronto. Higher interest rates, rising inflation and other changes in the macroeconomy are the true culprit, he said.
Di Bartolomeo said bitcoin has outperformed the NASDAQ by 10% since March 2019 and outperformed gold by 16% since that same period, which is why the cryptocurrency might still be worth the risk.
“While there may continue to be short-term pressure in (crypto) markets due to macro factors, the attributes that make bitcoin a great long-term investment still hold true today,” Di Bartolomeo told CBS MoneyWatch. “With increasing adoption and banks like Goldman Sachs starting to get involved, the current environment can offer some buying opportunities for investors with long-term conviction.”