The price of Bitcoin fell to below $33,500 in Monday’s trading as cryptocurrencies continued to take a hammering.
Crypto has kept falling in tandem with US stocks since the turn of the year, albeit to varying degrees, as investors weigh up the effect of incoming interest rate hikes.
Bitcoin, the world’s biggest cryptocurrency by market value, fell by 8% over the weekend, meaning that at latest trading of just above $35,000, it has nearly halved in value since its $69,000 high in November. Ether, the second-largest cryptocurrency by market cap, fell by 10% to trade at around $2,400.
Cryptocurrencies are facing regulatory pressure that is leading to negative sentiment about the future of the payment form.
Russia’s central bank recently proposed banning the use and mining of cryptocurrencies, edging toward the tougher stance on crypto taken up by China. Analysts are concerned that US regulators will increase the pressure on digital currencies by creating unfriendly rules.
What does this mean for me?
Champions of the crypto case often point to digital currencies like Bitcoin providing a hedge against rising inflation. However, hawkish moves by central banks to tackle inflation is rendering this action unnecessary, sucking the energy out of crypto markets.
Add this to negative legislation proposed by the likes of Russia, and you get a discouraged crypto market. For any other asset class, shedding half its value in the space of three months would be apocalyptic, but this is normal in the crypto world.
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