21st Century Economic Report Journalists Hu Tianjiao, Jia Junhui, Beijing, GuangzhouFor investors familiar with cryptocurrencies, they have long been accustomed to the ups and downs of Bitcoin.Since the beginning of 2022, Bitcoin has stumbled below $36000
21st Century Economic Report Journalists Hu Tianjiao, Jia Junhui, Beijing, GuangzhouFor investors familiar with cryptocurrencies, they have long been accustomed to the ups and downs of Bitcoin.
Since the beginning of 2022, Bitcoin has stumbled below $36000. On January 23, Beijing time, the price of Bitcoin briefly fell below $35000 per coin, setting a new low since September 2021.
According to Coindesk data, as of 20:14 Beijing time on January 23, the price of Bitcoin was $35636.13 per coin, a decrease of nearly 20% in the past week and nearly 30% this year.
As of 20:12 Beijing time on January 23, Bitcoin sold out $1.7574 million in one hour, $7.4782 million in four hours, and $200772 million in 12 hours.
In fact, since hitting a historic high of $68928.9 per coin on November 10 last year, Bitcoin has entered a volatile downward channel, with a current decline of over 40%, creating the longest sustained decline since 2018.
Multiple market insiders have analyzed that the main reasons for Bitcoin's decline in this round are the Federal Reserve's tightening monetary policy, widespread selling of technology stocks, and the regulation of the industry chain from mining, trading to online marketing by multiple countries.
Global regulatory wave resurges
In the new year, cryptocurrencies seem to face higher levels of global regulatory pressure.
On January 17th local time, after a wave of internet celebrities promoting cryptocurrencies on social networks, the Spanish National Securities and Markets Commission announced that it would impose restrictions on the promotion of cryptocurrencies by public figures, making it the first country within the European Union to take measures.
Specifically, CNMV requires influential individuals and sponsoring companies to report at least 10 days in advance when promoting activities, and to warn against the risks of cryptocurrency, or face fines. If the promotion behavior of internet celebrities is not covered in the regulatory field, it will create a loophole. For us and them, this is a new field and there will inevitably be friction, but when rules are introduced for some previously unregulated areas, friction will always occur. "Rodrigo Buenaventura, the head of the regulatory agency, said in an interview with the media.
At almost the same time, the Monetary Authority of Singapore (MAS) also imposed restrictions on the promotion of cryptocurrencies. "Recently some DPT (digital payment token) service providers actively promote their services through the Internet or in public areas, which may cause consumers to impulsively conduct DPT transactions without fully understanding the relevant risks. The new guidelines clarify the expectation of the Monetary Authority of Singapore that DPT service providers should not participate in the marketing or advertising of DPT services." MAS said that DPT service providers can only Marketing or advertising on mobile applications or official social media accounts.
Two days later, on January 19th local time, the Financial Conduct Authority (FCA) proposed to reform the rules related to the sale of high-risk investments to the public in response to relevant financial risks. Too many people are being guided to invest in products that they do not understand and are too risky for them, "said Sarah Pritchard, the CEO of the FCA market. The reform draft includes details on how financial regulators manage cryptocurrency advertising. Previously, the UK Treasury stated that it would include regulation of digital token promotion within the scope of FCA's responsibilities.
In contrast, Russia has a more stringent attitude towards cryptocurrencies. On January 20th local time, the Russian Central Bank announced that it would propose a ban on cryptocurrency trading and mining, with the aim of banning all cryptocurrency related businesses in the country.
The Russian Central Bank pointed out that compared to traditional payment systems, the proportion of cryptocurrency payment transactions can be ignored. However, due to the anonymity of transactions, currency substitution are widely used in illegal activities. "At present, the participation of traditional financial intermediary in the cryptocurrency market is limited, but the trading volume of derivatives and exchange traded funds (ETFs) related to cryptocurrency is growing, and the decentralized financial (DeFi) ecosystem is developing."
"In the long run, the potential of using cryptocurrency for settlement seems to be limited." The Russian Central Bank pointed out that the rapid growth of the market value of cryptocurrency such as Bitcoin was mainly stimulated by speculative demand and the expectation of further price rise, which led to the formation of a foam in the market.
The Russian central bank further pointed out that, like dollarization, cryptocurrencies limit the sovereignty of monetary policy, which may force the central bank to permanently maintain high key interest rates to curb inflation. This will reduce the credit burden on households and businesses. For emerging market economies, including Russia, the potential risks to financial stability caused by cryptocurrencies are much higher, especially due to the traditional tendency towards dollarization and insufficient financial knowledge
In order to mitigate the threat related to cryptocurrency expansion, the Russian Central Bank will propose to prohibit the issuance and circulation of cryptocurrency in the territory of the Russian Federation (including cryptocurrency exchanges and P2P platforms); Prohibit financial institutions from investing in cryptocurrencies and related financial instruments, and using Russian financial intermediary and Russian financial infrastructure for cryptocurrency transactions; Prohibiting mining activities related to certain types of cryptocurrencies.
However, Elizaveta Danilova, head of the Financial Stability Department of the Russian Central Bank, stated that Russians will still be allowed to hold cryptocurrencies overseas, and those with offshore foreign exchange accounts will be able to trade cryptocurrencies. At the same time, she also warned that regulatory agencies will track the holdings of domestic investors. It is very important to prohibit the use of Russian financial infrastructure to obtain cryptocurrencies, and we believe that this will help eliminate a significant portion of risks and ensure that the popularity of cryptocurrencies cools down
It is worth mentioning that developed economies represented by the United States have always been more tolerant towards cryptocurrencies. But the US Securities and Exchange Commission (SEC) has made it clear that cryptocurrency exchanges will become its main focus for digital asset regulation in 2022.
On January 20th local time, SEC Chairman Gary Gensler expressed the hope that trading platforms will take measures in the coming months to accept more direct supervision from financial regulatory agencies. Additional scrutiny is crucial for cryptocurrency investors to obtain the type of protection they receive when trading stocks or other assets
Bearish and bearish, each with their own opinions
Jason Deane, an analyst at Quantum Economics, a digital asset research firm, said that rumors of a Russian mining ban, the impact of a reduction plan, and ongoing regulatory concerns in certain jurisdictions currently weigh more in trading and investment decisions than long-term fundamentals of cryptocurrencies. At the same time, the increase in the use and adoption of Bitcoin in high inflation economies has created a chaotic market situation
Jason Dean predicts that cryptocurrencies such as Bitcoin will experience "volatile and directionless trading" in the short term, and may further weaken in the future.
UBS analyst James Malcolm directly stated that cryptocurrencies will enter a cold winter. According to UBS data, the current short-term holders of Bitcoin are almost zero.
In James Malcolm's view, investors have gradually realized that given the volatility and limited supply of Bitcoin, this cryptocurrency is not actually a better currency. And in the future, it will face even more stringent global regulation. "Stable currencies with skyrocketing prices and decentralized financial projects will definitely face government crackdowns in the coming months
However, there are still some internet giants who insist on favoring Bitcoin. Recently, FTXCEOSamBankman Fried, a cryptocurrency trading platform, stated in a media interview that he believes the price of Bitcoin may exceed $100000. "Of course, Bitcoin's performance may not be as good as we expected," he said. At the same time, he emphasized that from a consumer perspective, the arrival of more efficient Bitcoin spot ETFs is only a matter of time.
Compared to SamBankman's prediction with some leeway, Michael Saylor, founder and CEO of MicroStrategy, the world's largest publicly traded company that holds Bitcoin, is very decisive. Recently, he reiterated that even in the face of a long-term bear market, he will not sell any Bitcoin he holds. In his view, Bitcoin is the best means to combat inflation. He predicts that the price of Bitcoin will first reach $600000, and then eventually reach $6 million.
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