Bitcoin Crash: The cryptocurrency price fell to $27,000 due to rising interest rates

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Bitcoin crash:

The bubble bursts

Photo: BRENDAN MCDERMID/ REUTERS

Price fall of Bitcoin, Ethereum and Co: The world's best-known digital currency Bitcoin accelerated its price fall on Thursday night and fell below the 28,000 US dollar mark.

Bitcoin has lost around a third of its value within a week and is now at its lowest level since December 2020. Other cryptocurrencies such as ether also crashed.

The prospect of further rising interest rates is driving investors out of cryptocurrencies in droves.

Bitcoin reached a record high of $69,000 in November last year.

Since then, the rating has more than halved.

The prospect of further rising interest rates is considered to be decisive for the bad mood on the crypto market.

Not only in the USA, the world's largest economy, but also in many other countries, the central banks are fighting the high inflation with a tighter monetary policy.

Rising interest rates usually weigh on risky assets such as digital currencies.

In addition, Bitcoin and other crypto assets do not generate any current income such as interest.

When interest rates rise, interest-free investments become less attractive than interest-bearing securities such as fixed income securities.

There are also many investors still sitting on profits since the crypto market rally of 2021 - and now rushing money to safety as investors flee risky assets worldwide.

The pace of price slides in the crypto market is even faster than in the tech sector, where there have also been numerous overvaluations.

Crypto values ​​are also being weighed down by the ongoing uncertainty due to the Russian war against Ukraine.

Observers have noted for some time that digital currencies have moved relatively closely in sync with stock markets.

If the mood there deteriorates, the prices of Bitcoin and other Internet currencies often fall as well.

There has been little sign of their supposed status as a "safe haven", which crypto fans still like to attribute to digital assets to this day.

In March, Bitcoin was boosted by Russia's exclusion from the Swift communications system.

It has been suggested in industry circles that numerous Russian investors are increasingly using Bitcoin as a safe haven currency to park their assets.

Cryptocurrencies are considered a means of at least partially softening sanctions.

dri/dpa