Bitcoin Crashes to Five-Month Low As Russia Proposes Crypto Ban
By Saleha Riaz
Bitcoin’s (BTC-USD) latest crash has wiped billions off the crypto market as it plunged to a five-month low to below $40,000 (£29,484) on Friday. The steep decline of more than 7% comes as Russia proposed a crypto ban and investors grow pessimistic over riskier assets. The global stock market sell off has also weighed heavily on crypto prices.
At the time of writing, bitcoin was trading at $39,028. Etherem (ETH-USD), the second largest cryptocurrency by market capitalisation, was down 8.5% at $2,875.
This wiped about $140bn off their combined market cap, according to figures from CoinMarketCap.
There is a perception of global financial squeeze. The US Federal Reserve has said it will tighten monetary policy at a much faster pace to deal with persistently high inflation.
Russia said it is proposing a ban due to threats to financial stability and its monetary policy sovereignty.
“The news about Russia potentially banning crypto mining is significant considering Russia’s crypto trading volume last year was reportedly $5bn, and a ban will heavily impact this,” said Marcus Sotiriou, analyst at digital asset broker GlobalBlock.
“I do not think they will be able to completely stop crypto trading activity in Russia though. We have seen China attempt to ban crypto trading multiple times over the past few years, yet China remains one of the most active countries for crypto – decentralised finance which is enabled by cryptocurrencies is hard to monitor/stop.”
Meanwhile Naeem Aslam, chief market analyst at Ava Trade, said: “Pessimism continues to grow among investors and traders when it comes to riskier assets and this is chiefly influencing the price of equities and bitcoin.”
He said historically, bitcoin’s price tends to be much more volatile in January, but there are many factors impacting it at this point.
Bitcoin’s price plunged on Friday morning. Chart: Yahoo Finance UK
Last year bitcoin was boosted when mainstream companies and banks were embracing it. For instance, Tesla (TSLA) briefly said it would start accepting bitcoin. Despite expectations it would resume this, there has been no update.
“Before that, we had news that Paypal (PYPL) started to accept bitcoin. Those kinds of news waves were highly supportive of the bitcoin price. Today, we are missing all that, and hence the bitcoin price is falling to find love among traders.”
But Aslam is upbeat, believing bitcoin “is the currency of the future, and if one was ready to buy bitcoin at $68K, then he or she must be excited to see a bargain like today.”
“Smart money and other institutions are certainly going to take advantage of the current price action, and they are likely to bag some great bargain.”
From a technical price perspective, the bitcoin price has violated the key support level of $40K and now all eyes are on the next two important price levels: $35K and the most important one is $30K.
“It is highly likely that the bitcoin price will visit the 30K, but if it does will make the current sentiment even worse, but the smart money will know that it is a deal of their lifetime.”