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The crypto market has faced several challenges in the past week as bitcoin tanked by nearly 30% to a low level of $42,000 on Dec. 4 and other investors lost their crypto holdings when cyber criminals stole their assets.

Bitcoin could face other headwinds as the Federal Reserve signals it is planning several rate hikes in 2022.

Morgan Stanley strategist Michelle Weaver said bitcoin emerged in the aftermath of the Great Recession of 2008. 

“[Bitcoin is a] response to the Fed’s quantitative easing policies and poor sentiment around traditional banking,” she told MarketWatch.

Some retail investors favor investing in cryptocurrency like bitcoin because it is a decentralized system without banks, Weaver said. 

She posed one scenario on the cost of capital: If capital costs rise, then the preferences for cryptocurrency-based transactions may not continue if they are more expensive, risk level is higher, and the ease of use declines compared to other payment systems.

While bitcoin rebounded to slightly over $50,000 late Wednesday, the recovery was slight compared to its price of $48,000 on Friday.

Hackers have stolen bitcoin and the wallets that investors use. 

The latest hack occurred when cyber criminals nabbed $150 million from Bitmark. Another criminal stole $120 million in tokens from BadgerDAO, a decentralized finance platform.

Some investors are not concerned about valuation dips or massive thefts of crypto. El Salvador President Nayib Bukele said he paid an average price of $48,670 for 150 bitcoin.

Some of the rapid decline in value that occurred over the weekend was the result of investors who had to sell, said Nicholas Colas, co-founder of DataTrek Research.