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Interest rate hikes and tapering are both on the table. However, events in Russia are contributing to the sales force. The cryptocurrency market began to fall on Thursday evening (GMT). Except for altcoins, just Safemoon, Leo, and BitTorrent have remained green within the last 24 hours.
The overall cryptocurrency industry valuation was $2.029T prior to the dip. A severe sell-off occurred throughout the night and into the beginning of Friday, knocking $200B from bitcoin prices. The Fear & Greed Index fell 5 points from 20th January to 21st January, down from 24-19.
Social media posts indicate a combination of gathering cries to hold on, including claims that this is the last chance to purchase Bitcoin for under $40K. On the other hand, investors believe that this is only the beginning of a long bear market.
Cryptocurrency and Tech Stocks are Once Again Being Shunned by Investors
The Nasdaq dropped 1.3 percent to 14,846.46, a fourteen-week lowest for the tech-heavy index due to the bitcoin sell-off. Over the last weeks, there’s been a widespread notion that buyers are abandoning risky assets like cryptocurrency and tech stocks. An identical pattern emerged at the beginning of January 2022, with the aggregate cryptocurrency market valuations dropping by another $200B.
Analysts attributed the problem to several variables at the time, such as the discovery of a new variety, civil turmoil in Kazakhstan, and the Federal Reserve adopting a more hawkish approach to battle inflationary fears. The current sell-off implies that investors are losing faith in the Fed’s plan to decrease its balance sheet in tandem with upcoming interest rate hikes.
Russia Considering Prohibiting the use of Cryptocurrency
In yet another blow, Russia’s central bank announced that it is preparing a plan to prohibit the usage and mining of Cryptocurrency. The Central Bank of Russia, mirroring Chinese authorities, stated that this step would boost economic security, mental health and restore sovereign monetary authority.
The central bank claimed that speculative demand drove cryptos’ fast expansion and resembled an economic pyramid, signaling the risk of industry bubbles endangering economic independence and citizens.
According to the proposition, banks should not be allowed to interact with cryptos. It further said that technologies are being designed to prohibit on and off ramps and a cryptocurrency exchanges restriction.
Solaris Group’s Head of Financial Strategy, Joseph Edwards, downplayed the proposal’s macro impact. According to Edwards, Moscow has made similar threats in the past; however, compared to China, Russia hasn’t ever been a major cryptocurrency marketplace. While Moscow, including Beijing, is continually wagging its saber over ‘cryptocurrency prohibitions,’ Russia hasn’t been a foundation of the sector like China was at situations.