Crypto market has tumbled down this Friday, with the market cap dropping below the $2T and $1.9T marks. In addition, Bitcoin has dropped below $40,000 – dropping to its lowest level in 5 months. Meanwhile, Ethereum has also dipped below $3,000.
The State Of The Market
2021 ended disappointingly for the market. Many were hoping that PlanB’s $100,000 BTC prediction would hold true. Instead, Bitcoin ended the year at a disappointing $47,500. Plus, to add salt to the wounds, the overall market has been very sluggish so far in 2022. Just a little over two months back, on November 10, Bitcoin reached its all-time high of $68,789.63. However, it has dropped almost 45% since. Many traders on Twitter pointed out that BTC has formed a double top head-and-shoulders pattern so that the bottom could be at $30,000.
Is the Russian Ban The Reason Behind This Slump?
With 11% of the average monthly hashrate, Russia is the third-largest Bitcoin miner in the world, after the U.S. (35%) and Kazakhstan (18%). However, it looks like the country has no interest in being a mining haven. The Bank of Russia published a paper titled "Cryptocurrencies: Trends, Risks, and Regulation." In the document, the paper proposes a blanket ban on mining activities since it’s a “wasteful use of resources.”
The document notes that Russian citizens transact around $5 billion a year with cryptocurrencies and stablecoins. The Bank believes this is a bad thing because of crypto’s volatility, leading to investor risk. The document states:
"The spread of cryptocurrencies could make people withdraw their savings from the Russian financial sector and, subsequently, decrease its capability to finance the real sector and potential economic growth reducing the number of jobs and potential for household income increase."
Reaction From Twitter
“Markets are crashing, hedge funds liquidating their crypto assets, margin calls coming soon #MOASS imminent #AMCSqueeze 🚀”
“I freaked out on my first crypto crash and I was like LIFE IS OVER THE SKY IS FALLING I WOULD CHECK EVERY MINUTE FOR A REVERSAL LOL NOW IM LIKE "OH WORD ANOTHER CRASH COOL" lol”
Michael A. Gayed, CFA:
"Leverage is, was, and always will be the necessary pre-condition to a crash. A crash in one asset class is never just isolated to that one single asset class. Few understand this. #BTC"
"The Russian central bank has proposed banning #crypto like 12 times in the last 5 years lol"
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.