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Bitcoin price plummets to five-month low

Bitcoin price plummets to five-month low amid wider tech sell-off and Russian crackdown on cryptos

  • Bitcoin has plunged below $40k, its lowest level since August
  • It comes as the Federal Reserve announced plans to tighten monetary policy
  • The Russian Central Bank has announced proposals to ban all crypto trading



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Bitcoin has plunged below $40,000 as speculators dumped cryptocurrencies amid a wider technical sell-off with a potential rate hike looming.

The coin has fallen from its previous all-time high of more than $68,000, which it reached two months ago, as a blow to those who hoped it could act as a hedge against inflation.

It coincides with inflation in the UK hitting a 30-year high of 5.4 percent and general expectation that the Bank of England and the Federal Reserve will raise interest rates soon.

Bitcoin has plunged below $40,000, the lowest level since August last year when the Federal Reserve tightened monetary policy

Bitcoin has plunged below $40,000, the lowest level since August last year when the Federal Reserve tightened monetary policy

It has led Bitcoin to dip below the critical support of $40,000 to hit its lowest level since August. It is currently trading at $38,315.

The $37,000 to $40,000 area is often seen as a critical support level and should the price fall below that it could end what has been a bull run in the short to medium term.

“The notoriously volatile asset has now recovered more than 75 percent of its gains since the summer with the potential for risk-out sentiment in stocks to continue to weigh on cryptos,” said Victoria Scholar, head of investments at Interactive Investor.

Ethereum has also fallen below $3,000 and is down nearly 30 percent in the past month after hitting a high of nearly $5,000 before Christmas.

The negativity on Wall Street this week, with the Nasdaq losing nearly 5 percent, is permeating other risky assets, including the crypto complex.

An aggressive Fed track, which aims to dampen price levels, is softening the appeal of inflation hedge assets. In addition, the Russian central bank has announced draft proposals to ban all crypto trading.”

The Russian central bank has announced draft proposals to ban all crypto trading and mining.

The regulations would also block any crypto investment by banks and prohibit any exchange of crypto for traditional currencies.

“Russia imposing a blanket ban on Bitcoin mining could have an impact on its hashrate and price in the near term.

“However, I don’t believe this will be a headwind in the long run,” said Simon Peters, an analyst at eToro.

A mining hashrate is a security measure in crypto.

The more hashing or computing power in a network, the better its security and the less likely it is to be attacked.

It is estimated based on the number of blocks mined in the last 24 hours and the difficulty of the current block.

“Russia is only responsible for about 11 percent of the global hashrate. This is in stark contrast to China, which when it banned bitcoin mining in May 2021, the mining operations located there accounted for 60-70 percent of the bitcoin network’s global hashrate.

“When these China-based miners went offline due to the ban, the hashrate dropped significantly along with the price.

“But when those miners settled in other countries/jurisdictions, the hashrate recovered and is now at an all-time high.

“If Russia bans bitcoin mining, we might see a similar pattern, but to a much lesser extent.”

While the Russian regulation may seem stricter, it comes only after a slew of announcements about cryptocurrencies by regulators around the world.

This week, the Financial Conduct Authority announced it plans to crack down on financial advertisements over concerns about “the ease and speed with which people can make risky investments.”

It wants to ban investment incentives such as the refer-a-friend bonuses and rules around risk warnings would also be stricter.

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