Bitcoin and other cryptocurrencies fell on Tuesday as investor confidence worsened, and analysts expected a different dip. Losing $2 trillion in crypto market cap over months "underscores the necessity for greater regulation," the FPC stated.

What is happening to Bitcoin?

Bitcoin's price decreased by more than 5% in the last 48 hours, falling below $20,000 to $19,500. Bitcoin rallied during the previous weekend, reaching $22,000, but has since fallen again. The mid-June $18,000 bottom is in sight.

Same pain in other cryptos. EtherETHUSD +1.14 percent, the second-largest digital asset, lost 8%. SolanaSOLUSD +0.27% and Cardano both dropped by 5%. DogecoinDOGEUSD +0.68% and Shiba InuSHIBUSD +0.69%, first intended as internet jokes, were similarly poor.

Bitcoin trades at less than one-third of its all-time high above $69,000, achieved in November 2021, and has concluded its worst quarter since 2011—the first year it cracked $1. Cryptocurrency market capitalisation has fallen from $3 trillion eight months ago to $875 billion as investors prepare for the next "crypto winter."

Bitcoin's link to stocks has contributed to the drop in digital asset values. The S&P 500 and tech-heavy Nasdaq have both tumbled into a bear market this year on investor fears of multi-decade high inflation, rising interest rates, and recession—a lousy environment for risky bets like Bitcoin.

The rout weakened the crypto business, worsening price falls and punishing market participants. Meltdowns of stablecoin Terra, lenders Celsius and Voyager Digital, and a prominent hedge fund threaten widespread contagion.

What Bank of England is Offering?

The Bank of England's Financial Policy Committee urged for "greater regulation" of the crypto asset market. The committee focuses on the central bank's financial stability responsibilities, it stated that crypto-assets don't represent a threat to the wider financial system today, but they might in the future if they grow more prevalent. 

The collapse of Terra's stablecoin in May and crypto lenders blocking deposits last month spurred regulators to focus on the industry. Not to mention the $2 trillion market cap loss over months.

The bank highlighted the need for strengthened regulatory and law enforcement frameworks to address crypto-asset markets and operations. A stablecoin backed by a commercial bank deposit would bring "unwanted financial stability risk," the research says.

The U.K.'s financial industry regulator will examine Terra's failure when drafting new guidelines.

In April, the Treasury said it will establish a cryptosystem and regulate stablecoins. The UK isn't the only country seeking rules to safeguard crypto assets' financial stability. The European Systemic Risk Board, which ensures the stability of the EU's financial system, wants to develop guidelines with global authorities to reduce crypto assets that could affect the system.

What are the future projections?

Wall Street anticipates a worsening bitcoin crash. 60% of 950 investors in the latest MLIV Pulse survey predict the token will fall to $10,000, halving its value. 40% disagreed. Monday morning in New York, bitcoin slid 2.4% to $20,474.

The skewed forecast shows how gloomy investors are. Troubled lenders, failed currencies, and an end to the pandemic's easy money policies disrupted the crypto business. Retail investors were more skeptical of cryptocurrencies than institutional investors, with a quarter calling them junk. Professional investors viewed digital assets more favorably.

Consumers who lost money due to TerraUSD and bothersome intermediates like Celsius Network and Voyager Digital Ltd. will certainly appreciate the government's intervention. There is even a probability that Central banks may build their own digital currencies for digital commerce.

However, Recent price drops and central bank challenges won't dethrone Bitcoin and Ethereum, says the survey. Even while most respondents believe one of these two will still be a driving force in five years, many predict central bank digital currencies will play a key role in the financial system.