- Bitcoin's price moved above $40,000 on Tuesday morning before tumbling back down.
- News from Russia seemed to be the reason for another crypto price drop.
Positive headlines weren't enough to help Bitcoin keep its head above the $40,000 mark.
Cryptograndaddy Bitcoin (BTC) briefly tipped above $40,000 this morning, after a rise of almost 5% overnight. However, it's now slipped to almost $38,000 -- the lowest it's been in the past 30 days. Economic and geopolitical uncertainty have played havoc with crypto prices since the start of 2022. Today's price action suggests the situation isn't going to change anytime soon.
What's impacting Bitcoin's price?
There were a few factors driving Bitcoin's brief price surge. The biggest was crypto fan Elon Musk's successful Twitter takeover. News of the deal had a positive impact not only for his pet project, Dogecoin (DOGE), but for the whole market.
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Another positive headline was news that a major retirement fund would allow investors to put Bitcoin into their 401(k)s. Fidelity Investments, the nation’s largest retirement plan, said its crypto offering would be available by the middle of the year.
Some had fleetingly hoped that passing the all-important $40,000 mark might be the start of a new rally. Unfortunately, Bitcoin was unable to build any kind of momentum. News that Russia plans to cut gas to Poland and Bulgaria marked an escalation in an already fraught situation and sparked additional uncertainty. In addition to the human tragedy, the economic fallout from the conflict is growing. As a result, riskier assets like crypto are struggling.
What it means for investors
Unfortunately, cryptocurrency prices are volatile. It's part of the price we pay for the potential of high rewards in the long term. But that knowledge doesn't stop a prolonged price dip from being stressful, especially if you're one of the many people who bought cryptocurrency for the first time last year.
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We don't know what will happen to Bitcoin's price in the near term. The Russia-Ukraine conflict is not showing any signs of resolution. Inflation continues to rise, and some economists fear the Federal Reserve will impose even stricter measures to get it under control. This would have a knock-on-effect for crypto prices. The specter of increased regulation also lurks on our short-term horizon. All of these factors weigh on cryptocurrency prices. We're in a very different climate from the one that saw crypto reach new highs last year.
After more than four months of sub-optimal price action, it's easy for new investors to get disheartened. But if you sell your crypto for less than you bought it for, you'll lock in any losses and you won't be in a position to benefit if prices eventually recover. Ultimately, while these relatively low prices may be worrying, what matters is your long-term perspective. If you see your investments through a five- to 10-year lens, it is easier to keep even dramatic drops in prices in perspective.
Remind yourself of why you originally invested in crypto. Perhaps you agree with Jack Dorsey and think Bitcoin could be the global currency of the internet. Or perhaps you believe blockchain technology could turn whole industries upside down, including financial services. As long as you didn't invest money you need in the short term, you can afford to wait out this and any other price dip -- assuming your overall investment rationale still holds.
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Emma Newbery owns Bitcoin.
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