Another of the great cryptocurrencies, the Ethereum it also falls strongly, around 15%, to the area of $2,500. Terra sinks more than 17%. Cardano, for its part, also plummets 15%, followed by Solana, which loses 14%. Ripple and Polkadot fall 13% and 14% respectively.
Why are cryptocurrencies falling?
Experts explain that cryptocurrencies are affected by the possibility that the Central Bank of Russia prohibits both the sale and the mining of cryptocurrencies.
Likewise, this market is influenced by the possibility that the EE Federal Reserve (Fed). UU. tighten its monetary policy to combat inflation, which is leading many investors to dump shares of tech companies.
The Wall Street Nasdaq Composite Index, which brings together the most important technology companies, fell again in the previous day with force, 1.30%. In general, the ‘altcoins’ also touch lows of several months.
The declines in cryptocurrencies are an echo of the suffering of the technology sector on the New York Stock Exchange, just as it has transpired that more than 40% of operations in these assets are executed during Wall Street trading hours. The Nasdaq lost almost 5% this week, and the S&P 500 is on track to close its third consecutive week of losses.
Likewise, with Bitcoin 14% below the price level with which it started the year and almost 45% below its all-time high in November, at $69,000, there are several reasons to which the experts for this start of the year that does not bode well for analysts and casts doubt on the most optimistic predictions.
When 10-year US Treasury yields soared earlier this week, rising rates forced investors to shed their positions in riskier assets. Yields move in the opposite direction to prices. The reduction of stimuli and the tightening of the monetary policy of the US Federal Reserve (Fed) is bad for unregulated markets such as the ‘crypto’ market. The Fed’s ‘tapering’ and rising interest rates could lead to a reduction in global liquidity and ultimately affect the price of bitcoin.
Likewise, the cryptocurrency sector recently faced several regulatory setbacks such as skepticism about the rapid growth of digital assets around the world. Cryptocurrency exchanges will be in the crosshairs of the US Securities and Exchange Commission (SEC) in relation to digital assets in 2022. The Russian central bank yesterday proposed a ban on bitcoin mining and the trading these assets across Russia and in the European Union (EU), the European Securities and Markets Authority (ESMA) is pushing for the EU to ban cryptocurrency mining for assets using the proof-of-work (PoW) model. for the English proof-of-work) like Bitcoin.
Negative news also saw cryptocurrency funds see outflows for the fifth week in a row, digital asset manager CoinShares said in a report, net outflows from digital asset investment products for the week ending January 14 rose $73 million.
All of the above generated a perfect storm in the crypto market and the technical analysis does not bode well, since, once the $40,000 is lost, the next important support is located around $30,000.