Monday, June 5

Crypto crash: the market lost half its value in the last 70 days

Other digital assets such as Ethereum, Solana and Cardano fell between 50 and 60% in the last two months, according to data from the Coinmarketcap portal.

This is the second biggest drop in dollar terms for both after the sharp drop in May 2021, according to Bespoke Investment Group.

The Federal Reserve’s intentions to rein in inflation are rattling cryptocurrencies as well as stocks and many other risky assets, a correction made particularly noticeable in Nasdaq-traded tech papers, which fell 5% on the stock alone. last week..

To these is added that the United Kingdom, Spain and Singapore took measures to regulate promotions and advertising related to cryptocurrencies since the end of last year.

However, the strongest blow came last Thursday when the central bank of Russia proposed to completely ban the mining and exchange of crypto-assets, considering that they represent a risk to “financial stability and the sovereignty of monetary policy”.

It must be taken into account that Russia is the third country where more mining operations are carried out -necessary to validate transactions or generate new coins- thanks to the cold of the north of its territory and in Siberia, where low temperatures help to cool more easily. computers used for this purpose.

This is another of the reasons why it is intended to advance in the prohibition of mining operations: its high consumption of electrical energy.

According to data from the University of Cambridge, Russia represents 13.6% of global mining, while the United States stands at 42.7% and Kazakhstan 21.9%.

While cryptocurrencies are legal so far in Russia, they are not allowed as a means of payment, and the Russian central bank banned investment funds from using them in December.

It is worth remembering that the previous sharp drop in Bitcoin also coincided with a similar ban in China – a country that came to represent 70% of the mining – in May 2021, when the price of Bitcoin reached US $ 28,000, although later it could recover and pass its previous maximum of US$64,000, which it had also set a month ago.

“Rumors of bans in Russia, the effects of tightening central bank monetary policies, and the possibility of new regulations are weighing more heavily on cryptocurrency trading and investing currently than long-term trends,” Jason Deane, an analyst in digital assets at Quantum Economics, told the Bloomberg agency.

Currently, in addition to China, cryptocurrencies are prohibited in Egypt, Iraq, Qatar, Oman, Morocco, Algeria, Tunisia and Bangladesh.