Bitcoin Has Recently Lost A Lot Of Its Value. Here's Why

Despite the notion that Bitcoin's value should be based on the utility and prospective longevity of the technology central to the cryptocurrency, it would appear that the blockchain-based coin's cost remains tied to more traditional market trends. We live in a world where information is shared in an instant, and data about just about anything is available to anyone at any given moment. As such, the value of a cryptocurrency like Bitcoin is based largely on public perception.

Right now, the public seems to think we are in the middle of a Crypto Crash. While one cryptocurrency may have relatively little to do with another, the entire idea of cryptocurrency is still new enough that major investors likely see the failure of one major coin as the failure of the rest. We also have to consider two major factors that have ridden roughshod through the cryptocurrency market from the start: influential public personalities and professional investors.

Unchecked influence

When we're talking about the value of any cryptocurrency, we have to take into account the idea that we're dealing with largely unregulated market action. Anyone can pretty much say anything they want about Bitcoin in any sort of public forum, and no government will have the authority to tell them to stop. For example, a tweet shared by CryptoWhale this week suggested that he'd give $1,000 to anyone who retweeted his message if Bitcoin's value did not hit $10,000 by the end of 2022. This is the sort of thing that could be the basis of a legal investigation if it were tied to a regulated stock.

Of course, this sort of public influence has been the subject of some major legal action in the recent past. Elon Musk's tweets about Tesla were the subject of some SEC scrutiny in 2019, and in 2022 his purchase agreement with Twitter has already landed him in trouble since the agreement said he's not to "disparage the Company or any of its Representatives" in his tweets about the deal. Neither Bitcoin nor any other cryptocurrency has such protection.

Elon Musk or any other major influencer can tweet about Bitcoin all day long, regardless of how much they have invested in the coin at any given time. If Elon Musk says something on Twitter about Tesla, Tesla's value on the stock market could fall, and Musk's associations with Dogecoin could make the value of the dog-themed coin fall. If Elon Musk announces that Tesla is no longer accepting Bitcoin payments, the entire cryptocurrency market falls.

Professional investors and the global market

According to the BBC, Bitcoin may be suffering from "professional investors" becoming more active in trading cryptocurrencies, as said investors tend to follow global markets, news, and other traditional guides for market trends. As this happens, Bitcoin's value follows the value of technically unrelated investments. 

As global interest rates have risen, stock markets have fallen, and Bitcoin's value has also decreased. If an investor has been following an investment-centric news source like Fortune their entire adult life, a Fortune article that asserts the appearance of a "crypto plunge" will likely encourage a move back to more reliable investments. Volatility has always been a major point of consideration for Bitcoin investors. That won't likely change any time soon, as significant changes in value this year alone have made quite clear.