Bitcoin’s value dropped to its lowest point this month, with more than RM40000 of its value being wiped out in this month alone. At the time of writing, the value of the cryptocurrency hovers at the RM130000 average, the lowest the coin’s value has ever been in 16 months.
As to why and how Bitcoin has lost nearly half its value in that time, many experts have pointed fingers towards the dramatic crash in value of Terra (Luna), a stablecoin that was once lauded as one of the 10 most valuable cryptocurrencies in the world. Luna’s value tanked by 98% overnight, making the coin worth less than US$1 (~RM4.40) – a large contrast over its peak value of US$120 (~RM527) back a month ago. That, in turn, caused a domino effect, affecting another stablecoin, Tether, causing its value to decline to more or less the same average value of less than a single US dollar.
Even Ethereum, the second most valuable cryptocurrency and most commonly mined coin today, saw its average value dip below the RM10000 mark, down from its previous average value of RM13000. Needless to say, the steep decline in value has seen several individuals with a stake in Bitcoin become frantic, with some going into an obvious panic mode and dumping whatever they have preemptively, in anticipation of the cryptocurrency’s value degrading even further.
— Nayib Bukele (@nayibbukele) May 9, 2022
On another note, one country that is sure to feel the brunt of the Bitcoin value dropping is El Salvador. Some of you may remember back in 2021 when the country’s president, Nayib Bukele, approved and officially made Bitcoin the legal tender of the small Central American nation. Many were skeptical about the adoption and even the IMF had advised the country against doing so, but Bukele’s devotion to the digital coin was still strong. How strong, you ask? Strong enough that he planned on building a city devoted entirely to it. Given the current drop in its value, however, Bukele’s plan may have to take a back seat, as he clearly needs to get his country’s financial affairs in order, less it defaults on its national debt.