Analysis

Bitcoin falls to $40,000

Bitcoin price suddenly crashed and fell to 40,000 US dollars one 21th January.

In just a few hours, bitcoin price plummeted from more than $43,000 to less than $40,000 U.S. dollar. On January 21 at 9 a.m. (Vietnamese time), the price of the largest digital currency fluctuates around 39,910 U.S. dollar.

Red color spreads across the virtual currency market. Ethereum fell nearly 6% to 2,920 U.S. dollar, Binance Coin fell nearly 8%, Solana plunged 9%.

Source: CoinMarketCap

The reason for this drop in and the virtual currency market is still unclear. Earlier, the virtual currency market received negative news from Russia – the third largest bitcoin mining country in the world.

On Jan. 20, the Central Bank of Russia proposed to ban the use and mining of cryptocurrencies in the country. The reason given is that virtual currencies threaten the country’s financial stability, people’s well-being and monetary sovereignty.

Before that, Russian authorities had been arguing for years about banning cryptocurrencies, as some experts say they can be used for money laundering or terrorist financing. Finally, in 2020, Russia made cryptocurrencies legal but did not allow the currency to be used as a means of payment.

On February 20, the Bank of Russia said that speculative demand for cryptocurrencies has led to rapid growth and that they have the characteristics of a scam. At the same time, he warned that a cryptocurrency bubble would form in the market, threatening financial stability and the people of this country.

The bank proposes blocking financial institutions from conducting cryptocurrency operations. The agency also said mechanisms must be developed to block purchases or sales of cryptocurrencies in exchange for fiat. The proposed ban includes crypto exchanges.

According to the Bank of Russia, Russia is a country with an annual trade volume of about 5 billion dollars and is also the world’s third-largest bitcoin mining country after the United States and Kazakhstan.

In addition, the bank said that cryptocurrency mining also leads to energy consumption problems. Accordingly, the process of mining Bitcoin and other cryptocurrencies consumes electricity and is often powered by fossil fuels.

“Therefore, the best solution is to introduce a ban on cryptocurrency mining in Russia,” suggested the Central Bank of Russia.

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Annie

Championing positive change through finance, I've dedicated over eight years to sustainability and environmental journalism. My passion lies in uncovering companies that make a real difference in the world and guiding investors towards them. My expertise lies in navigating the world of sustainable investing, analyzing ESG (Environmental, Social, and Governance) criteria, and exploring the exciting field of impact investing. "Invest in a better future," I often say. That's the driving force behind my work at Coincu – to empower readers with knowledge and insights to make investment decisions that create a positive impact.