News of the Week: Bitcoin Volatility, Market Fears Fed Announcements

The fall in the price of bitcoin (BTC) is once again one of the most outstanding news of the week as the decline experienced by the cryptocurrency since January 21, when its value fell below USD 40,000, deepened. The long-awaited announcement by the US Federal Reserve about raising interest rates, in order to influence prices and curb demand, is considered one of the main causes of the downturn.

Despite the drop that took BTC to trade around $33,000 on Monday, January 24, the price has remained more or less stable over the last seven days with some rallies that brought it closer to $39,000. The average weekly drop is estimated at 0,7%. At the time of this writing, the cryptocurrency is trading at USD 37,182, as reflected in the market price of Latin America and Spain, according to the CriptoNoticias price calculator.

With CriptoNoticias, those interested can keep up to date on price changes in the bitcoin and ether market in relation to their local currency. To do this, you can visit the BTC and ETH Prices section, which has a calculator to quickly and easily convert to your national currency.

These are the most important news:

• the probable increase in interest rates that the United States Federal Reserve (FED) plans to make this 2022 It is one of the reasons why bitcoin has lost support above USD 40,000, according to economist Juan Ramón Rallo. For the Spanish, investors could have been fleeing from BTC and liquidating their positions to generate higher returns with financial assets and government bonds. The argument is supported by the analyst Willy Woo, who explained that the drop was not based on the technical conditions of the network, since the indicators pointed to a risk off on the market, that is, a high perception of risk by investors.

• In this environment of high fear, the FED offered a press conference informing that the increase in interest rates will be announced next March. Shortly after, BTC touched USD 39,000 at times. Goldman Sachs analysts agree with Willy Woo in pointing out that the volatility of bitcoin shows a high correlation with the stock market. The financial entity affirms that the increase in adoption has boosted the correlation of cryptocurrency with macroeconomic variables. Data from Bloomberg placed the correlation coefficient between Bitcoin and the Nasdaq 100 and S&P 500 indices at all-time highs.

• Arizona State Senator Wendy Rogers proposed before the local Legislature to give bitcoin the status of legal tender In this state. The proposal, considered in principle as a state reform, will enter a first phase of evaluation, although it will then have to go through the United States Congress. The bill comes in a context in which the White House is requiring federal agencies to carry out investigations into the investment risks of crypto assets. Together with a team of experts, President Joe Biden would be preparing a regulatory strategy that may be presented in February.

• The manufacturers of bitcoin wallets Trezor, BitBox, Sparrow and BlueWallet integrated into their products a protocol to confirm ownership of an address to exchanges. AOPP (Proof of Address Ownership Protocol) is designed to comply with the controversial FATF “Travel Rule” in Switzerland and the Netherlands. A day later, before the heated debate that was generated on social networks describing the AOPP as violating privacy, Trezor and other manufacturers decided to eliminate the protocol. The incident occurred at the same time that a survey revealed that only 60% of the companies in the ecosystem have implemented the travel rule.

• The Russian Ministry of Finance has presented a new proposal to establish a framework of regulations for bitcoin. This, in the midst of the debate that has arisen in recent weeks after the central bank recommended prohibiting the use of cryptocurrency. His plan is for the exchange to take place through banks of the country to be able to trace the movements. The agency considers that a ban like the one made by China would cause technological backwardness. The idea of ​​regulating and not prohibiting it was supported by President Vladimir Putin, who spoke out in favor of bitcoin mining. Personalities such as the CEO of Telegram, Pavel Durov, and even the Binance exchange spoke out in support of the regulation.

If you want to know the meaning of several words of the terminology of the crypto world, you can consult them in the extensive Glossary of CriptoNoticias.

Weak Hands: literally, “Weak Hands”. It refers to a cryptocurrency investor who gets carried away by emotion or panic when buying and selling, easily getting rid of their holdings.