finance

Bitcoin suffers massive price crash before bouncing back in latest cryptocurrency market twist


BITCOIN crashed today below $40,000 before immediately bouncing back above its previous value.

On Monday afternoon the biggest cryptocurrency fell to $39,796.57, a dip investors feared as Bitcoin has had a rough start to the year.

Within minutes Bitcoin had recovered

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Within minutes Bitcoin had recovered

Bitcoin had not previously sunk below $40,000 since early August 2021, during a long and painful summer slump.

But within minutes it had trampolined back to $41,000 as investors appeared to rally behind the coin.

Bitcoin’s market cap briefly hit a low of $750billion at 2.40pm Greenwhich Mean Time (9.40am Eastern Time), its lowest valuation in months.

Yet by 2.54pm GMT (9.54am ET) it had recovered to $775billion, above its pre-crash market cap.

After 3pm GMT (10am ET) Bitcoin began to fall again, with investors fearing a double-dip collapse.

It is now wavering around the $41,000 mark – but there’s no indication where it will go next.

The bounce is just the latest sign of the cryptocurrency market’s incredible volatility.

Bitcoin also fell last night after the Kazakh government switched off power and miners clashed.

Its value is now floating around $40,000, down from $69,000 in early November last year.

As by far the biggest cryptocurrency, Bitcoin trends can have ripple effects across the world of crypto.

The coin has struggled amid uncertainty in the wider US economy, with the Federal Reserve discussing hiking interest rates in March – sooner than expected.

The latest plunge follows a crypto crash at the start of December, shortly after Bitcoin hit a record value of $69,000 in November.

Bitcoin has now lost one-third of that value.

Bitcoin is a virtual currency that was created in 2009 by an unknown computer whizz using the alias Satoshi Nakamoto.

Unlike physical currencies such as pounds, dollars or euros, which come in physical notes and coins, Bitcoin isn’t printed or minted.

Instead, Bitcoin tokens are a digital-only form of payment and are created by a computer code.

Its value has fluctuated wildly since its launch.

Its price hit record highs last year as cryptos boomed, aided by backing from Elon Musk, interest from major financial institutions and support from major tech finance firms including PayPal.

But regulations and opposition in India and China saw the value plunge.

Keep up to date with the top cryptos in January 2022.

5 risks of crypto investments

THE Financial Conduct Authority (FCA) has warned people about the risks of investing in cryptocurrencies.

  • Consumer protection: Some investments advertising high returns based on cryptoassets may not be subject to regulation beyond anti-money laundering requirements. 
  • Price volatility: Significant price volatility in cryptoassets, combined with the inherent difficulties of valuing cryptoassets reliably, places consumers at a high risk of losses.
  • Product complexity: The complexity of some products and services relating to cryptoassets can make it hard for consumers to understand the risks. There is no guarantee that cryptoassets can be converted back into cash. Converting a cryptoasset back to cash depends on demand and supply existing in the market. 
  • Charges and fees: Consumers should consider the impact of fees and charges on their investment which may be more than those for regulated investment products.  
  • Marketing materials: Firms may overstate the returns of products or understate the risks involved.
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