One cause was what happened on Wall Street. Tech stocks were hit hard with its tech index, the Nasdaq, plunging more than 10% from its November high.
“Pessimism continues to grow among investors and traders when it comes to riskier assets and this is mainly influencing the price of equities and Bitcoin,” comments Naeem Aslam, head of research at Avatrade.
In addition, “the deep correlation with the stock market only indicates a lower utility (for bitcoin) as an investment class,” adds Neil Wilson, an analyst at Markets.com.
On the other hand, seasonality does not play in favor of digital currency. “January is not the best month for Bitcoin, as historically speaking, the price tends to be much more volatile,” explains Aslam. In the last ten years, minimum profits are recorded for the first month of the year.
Regulations and rule changes are other negative factors. The US Securities and Exchange Commission has plans to crack down on ‘crypto’ exchanges in 2022, its chairman Gary Gensler revealed at a press conference on Wednesday.
In parallel, the European Securities and Markets Authority (ESMA) is pushing for the EU to ban cryptocurrency mining for assets that use the proof-of-work model like Bitcoin. Along the same lines, the Central Bank of Russia proposed to ban the use and mining of cryptocurrencies on its territory.
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