Bitcoin drops to six-month low as investors dump speculative assets

Bitcoin fell to a six-month low on Saturday, extending steep declines recorded in the previous session as the crypto market was swept away by a sharp shift in investors away from the asset. muscle.

The price of the largest digital token by market value fell 4.3% Saturday morning in Europe to $35,127, its lowest level since July 2021. Bitcoin has now lost almost a portion. value this year.

Other cryptocurrencies are also coming under intense selling pressure, with the FT Wilshire index of the top five tokens excluding bitcoin dropping 30% in the first month of 2022.

The crypto roadmap comes as investors dump shares in tech companies on expectations the US Federal Reserve will move to rein in pandemic monetary policy to combat inflation. This week, global stock markets posted their steepest declines in more than a year, with fast-growing companies that have aided the recovery from the depths of the coronavirus crisis suffering the brunt of the pandemic. violent decline.

Investors now expect the Fed, the world’s most influential central bank, to raise rates three to four times this year, which has sent bond yields soaring. Higher yields on low-risk assets like U.S. government bonds make the potential returns that can be earned through speculations like cryptocurrencies looking less appealing, say analysts. more, analysts say.

Chart showing bitcoin price drop on Thursday and Friday

Andrew Sullivan, managing director of Outset Global in Hong Kong, said Asia is seeing “massive volumes of selling in some markets as investors turn to cash” on Friday, when Tech stocks in the region fell.

The sharp sell-off in digital assets also comes a day after Russia’s central bank published draft proposals on Thursday. seek to ban all trading and mining cryptocurrencies. The proposed regulations would also block cryptocurrency investments by banks and ban any cryptocurrency-for-traditional currency exchanges in Russia, one of the world’s largest cryptocurrency mining hubs. .

The central bank said in its 36-page report that the rapid rise in value of cryptocurrencies “is determined primarily by speculative need for future growth, which creates a bubble.” , adding that they “have aspects of the financial pyramid as well, because their price growth has been largely supported by demand from new entrants to the market”.

The initial announcement had little impact on bitcoin, which surged as much as 3.7% against the dollar on Thursday. But on Friday afternoon in Asia, the cryptocurrency fell more than 10% from the previous day’s high and hit its lowest level since August.

“Russian regulators were disappointed [with the cryptocurrency industry] for several years and none of their warnings were heeded,” said Vince Turcotte, Asia Pacific sales manager at Eventus Systems.

He added that while Russia’s proposal is “relatively harsher,” it is just the latest in a series of crypto announcements by regulators globally that have largely focused on in protecting retail investors.

Turcotte likened the situation in Russia to China before Beijing began a stronger crackdown on the industry. “No one listens” [Chinese officials] until they actually lower the hammer,” he said. Last year, China declared that all crypto activities are illegal.

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