This week was a rough week for those who invest in cryptocurrencies. All of the major cryptocurrencies saw a reduction in their price levels this week, but bitcoin saw the biggest reduction in its value. This week, the price of bitcoin dropped below the $10,000 level. This is a level that many investors view as a psychological level. This means that when bitcoin goes below the $10,000 mark, investors begin to worry about the safety of their investment.
One factor which caused the drop in the bitcoin value this week was the rating of bitcoin in the Crypto Fear and Greed Index, reports forbes.com. This is an index that uses a variety of criteria to rate investment sentiment in cryptocurrency on a level from 0 to 100. A zero rating is considered extreme fear while a rating of 100 is a rating of greed. This week, the index listed bitcoin at an 11 which is near the extreme fear mark.
There are other factors that caused a drop in bitcoin prices this week. There is an overall feeling within the investment markets that the economy may be heading towards a recession in the not too distant future. The Dow did see an 800-point drop this week. There was a recovery towards the end of the week.
One factor that is harming investment in all cryptocurrencies is the regulatory environment surrounding cryptocurrency. In June, Facebook floated the idea of creating its own cryptocurrency. However, regulators took a dim initial view to Facebook’s cryptocurrency idea. Investors are fearful that this does not bode well for a broader use of cryptocurrencies in the future.
Bitcoin has seen low levels on the fear index in the past, and then is bounced back. Low levels on the index occurred when bitcoin fell to the $3,000 mark and when Facebook announced that it might create a cryptocurrency.
