Cryptocurrency market last week: Bitcoin and Ethereum have fallen deeply

Cryptocurrency market last week: Bitcoin and Ethereum have fallen deeply

Both Bitcoin and Ethereum fell sharply on Saturday (January 22) as worries about rising bond yields sparked a wave of capital withdrawals from highly speculative assets.

Bitcoin to $36,000, Ethereum and Solana down more than 20%

Bitcoin is down 15% to 36,000 U.S. dollar on Jan. 22 according to CoinMarketCap. Ethereum – second largest cryptocurrency by market cap – falls to 2,500 U.S. dollar. Over the past week, Bitcoin is down more than 15% and Ethereum is down more than 22%.

Other coins in the top 10 virtual currencies also plummeted, with Solana down more than 25%, Terra down almost 21%, and Polkadot down almost 30%.

The cryptocurrency market joined Wall Street’s decline. Major stocks also fell, with the Nasdaq Composite down as much as 7.6% and the S&P 500 down 5.7% this week.

Rising interest rates have prompted investors to reduce positions in risky assets. Earlier this week, the US 10-year Treasury yield exceeded 1.9%. The Fed also unveiled plans to raise interest rates three times and trim its balance sheet.

A common argument made by bitcoin speculators is that amid the government’s stimulus package, bitcoin is seen as a hedge against inflation. However, analysts say there is a risk that the Fed could turn more restrictive, curb inflation and negatively impact Bitcoin.

“I’m a bit disappointed to see that bitcoin price isn’t reacting more positively after bond yields have fallen,” said Edward Moya, market analyst at Oanda.

Many experts’ forecast for the near future is that the price of Bitcoin will continue to fall due to tightening investment regulations in many countries along with tightening of interest rates to control inflation.

The Central Bank of Russia proposes to ban all cryptocurrencies

After China, it was the turn of the Central Bank of Russia to propose a ban on the use and mining of digital currencies on the territory of this country on January 20. The reason given is that this currency threatens the financial stability, the well-being of the people and the monetary sovereignty of the country.

Russian authorities have repeatedly argued about banning cryptocurrencies. Some officials criticized that Bitcoin could be used to launder money or finance terrorism.

“Russian fiat currency has steadily depreciated over the past several decades. This makes Bitcoin an attractive investment for Russians in recent years,” commented Oanda’s Mr. Moya.

“Russia is among the top three countries in terms of bitcoin mining. Therefore, the cryptocurrency proposal pushed the bitcoin price well below the $40,000 threshold,” the expert said.

Kosovo announces restrictions on cryptocurrency mining

The Kosovo government just banned cryptocurrency mining to ease the energy crisis. This move sparked a wave of cryptocurrency mining equipment sell-offs.

From Facebook to Telegram, Kosovan crypto groups are being inundated with posts selling Bitcoin mining gear at low prices.

“They are selling their devices or trying to move to neighboring countries,” CryptoKapo, an investor and manager of some of the largest crypto communities in the region, told the Guardian.

Miners are targeting Kosovo because it has the cheapest electricity in Europe, in part because more than 90% of the country’s electricity comes from burning lignite reserves and government subsidies.

The number of crypto miners in Kosovo is said to have skyrocketed in recent years. Groups like Albanian Crypto Amateurs on Facebook and Crypto Eagles on Telegram have exploded with thousands of new members, although it remains unclear how many are mining or to what extent.

Latest calculations from the University of Cambridge show that global bitcoin mining consumes 125.96 terawatt hours of electricity per year, taking Norway (122.2 TWh), Argentina (121 TWh), the Netherlands (108.8 TWh) and the United Arab Emirates (113.20 TWh).

Meanwhile, in the final days of 2021 in Kosovo, power outages continued across the country. At the height of the crisis, the country had to import around 40% of its energy from the international market.

“It is time to understand and address the major environmental and energy impacts it is having on our communities and our planet,” said committee chairs Frank Pallone and Diana DeGette, who chaired the panel.

Since the Kosovan authorities made the decision, police and customs officials have been conducting regular raids and seizing hundreds of bitcoin miners.

“There are many people who have invested in crypto mining equipment and the money they are spending is not small. People even took out loans to invest and the impact is very bad on their lives now,” CryptoKapo said.

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