Virtual currency market last week: a number of virtual currencies collapsed

Bitcoin near the $ 41,000 line and a number of other virtual currencies fell sharply after the Fed signaled a faster tightening of monetary policy.

The virtual currency market is on fire, Bitcoin has fallen 40% from its peak

The largest digital coin has now dropped to 41,882 U.S. dollar on the morning of January 8th, more than 10% less in the past 7 days and 40% below the record of nearly 69,000 U.S. dollar set up on 10.11.

Lately, Bitcoin has been falling steadily overall amid the volatility of the financial market. Rise in inflation has led central banks around the world to tighten monetary policies, which threatens to undermine the abundant liquidity that has driven asset prices for the past two years.

Meanwhile, Ethereum fell nearly 14% to nearly 3,200 U.S. dollar, its lowest level since September 30th.

Other coins in the top 10 are also in the red, Binance Coin is down almost 13%, Solana is down 20%, Terra is down 20%.

The market capitalization of the cryptocurrency drops to 1,190 Billion USD, less than VND 120 billion USD in last week.

Top 10 largest digital coins

Source: CoinMarketCap

The decline came after the minutes of the Fed’s December meeting signaled that the central bank could hike rates sooner and faster than forecast, as well as the opportunity to cut the balance sheet.

Policy makers indicate that the Fed will raise the key rate sooner or faster based on its individual outlook for the economy, labor market and inflation.

In addition, some policymakers also advocate starting shrinking the Fed’s balance sheet immediately after a rate hike.

“Some officials also believe that the right time to start shrinking the Fed’s balance sheet is right after the Fed hike rates,” the minutes of the December monetary policy meeting said.

Unrest in Kazakhstan makes Bitcoin miners unhappy

When the Central Asian country of Kazakhstan fell into chaos this week, its Bitcoin mining hub was also badly hit.

Almost a year ago, China banned all cryptocurrency miners, many of whom moved to neighboring Kazakhstan. But months after these miners set up the mining infrastructure, the fuel price protests became the worst unrest Kazakhstan has seen in decades, and also left cryptocurrency miners caught in the crossfire.

The Kazakh President Kassym-Jomart Tokayev has ordered the state telecommunications provider to shut down Internet services and thus stop Bitcoin mining in this country. Bitcoin miners in Kazakhstan are known to account for nearly 15% of all bitcoin mining activity in the world, said Kevin Zhang of the Foundry.

The internet has been cut, causing mining operations in Kazakhstan to cease at a time when the cryptocurrency market collapsed.

The situation of “Internet darkness” makes it impossible for miners to continue working. “Without the Internet, it is impossible to mine coins,” said miner Didar Bekbau on Twitter.

Billionaires target cryptocurrencies to hedge inflation

The interest of the financial industry billionaires in the crypto industry is growing as they tend to view Bitcoin and other large cap cryptocurrencies as an inflation-resistant asset despite the volatility.

In 2017, Interactive Brokers President Thomas Peterffy published a full-page ad in the Wall Street Journal warning of the risks Bitcoin futures contracts pose to capital markets. Today, the Hungarian-American billionaire with assets of around $ 25 billion is an expert on cryptocurrencies. Peterffy advises investors to invest 2-3% of their personal wealth in cryptocurrencies in case the fiat currencies are heavily devalued.

Peterffy holds a number of cryptocurrencies, while his company recently started offering Bitcoin, Ethereum, Litecoin, and Bitcoin cash trading services to clients after they were in high demand.

Thomas Peterffy

The 77-year-old billionaire said Interactive Brokers will allow its customers to trade 5 to 10 more cryptocurrencies starting this month. He argues that cryptocurrencies can produce exceptional returns, even when the opposite is also possible. “I think the value of crypto could go to zero, but I also think it could go as high as a million dollars,” he said.

The case of Thomas Peterffy illustrates the changing attitudes towards cryptocurrencies among billionaire investors who once despised or were suspicious of cryptocurrencies but realized last year that they couldn’t afford to forego the earnings potential.

Even if the prices in the cryptocurrency market fluctuate strongly, investors large and small are eager to buy and sell Bitcoin and Ethereum as well as non-fungible tokens (NFTs) based on blockchain technology, as well as other junk cryptocurrencies (shitcoins).

Just months after billionaire Ray Dalio, founder of the world’s largest hedge fund Bridgewater Associates, expressed skepticism about crypto’s ability to maintain the asset’s value, he recently announced that he has Bitcoin and Ethereum in its portfolio.

He sees it as investments in alternative currencies in a world of cash that is increasingly depreciating as inflation erodes its purchasing power. “Cash is no longer a safe investment because it is ‘taxed’ by inflation,” he said.

Billionaire Paul Tudor Jones, founder of investment firm Tudor Investment Corporation, says he prefers cryptocurrencies over gold as an inflation hedge. He said the percentage of cryptocurrencies in his portfolio is in double digits.

A recent survey by Goldman Sachs of more than 150 companies that manage the assets of the world’s super-rich families with whom the bank does business found that 45% of them would like to add more money to help fight rapid inflation to protect.