Bitcoin loses 16.8% value in January, as bond threatens crypto

 

The most popular cryptocurrency, bitcoin, shed more in value in January 2022, than it did in the corresponding month of 2021, as the digital asset succumbed to various government policy, including rising bond yields.

Bitcoin had opened January with $46,306.45 per BTC, but it crashed in market value, as investors priced it low till it nosedived by 16.8% in 31 days to $38,483.13 on January 31, 2022.

During the corresponding period in January 2021, bitcoin appreciated in value by 14.18%, closing the month at $33,114.36, against the $29,001.72 it started the period with.

This means bitcoin lost the gains of January 2021, which was $4112.64, considering $7,823.32 was wiped off the asking price of the crypto asset during the same period last month.

The struggle of bitcoin to stay above $40,000 in January reflected the coin’s inability to withstand shocks from government policy or tie down investors from eyeing other securities to hedge inflation.

In Q4 2021, bitcoin sustained a major hit from far away China, with the country clamping down on BTC miners and exchanges. But while that impact was minimal, the return of U.S bond left it in a critical condition.

Bond threatens, drags speculative bitcoin down

Following late December announcement of U.S Federal Reserves looking to improve yields from bonds to attract investors, short term bitcoin holders engaged in a sell off to move their capital into the bonds, dragging BTC value down in January.

This proves that while bitcoin could have withstood the presence of gold in the asset class or safe haven market over the years, bond still had a say on the direction of BTC, even if the latter had grown to be the breakout asset of the current decade.

While the U.S bond has been rising in rate, bitcoin has declined simultaneously, reflecting investors still see the BTC as speculative compared to the risk-free bond, hence, making the latter more threatening to bitcoin.