Most of the world’s biggest cryptocurrencies by market cap, apart from stable coins, took a hit last week. For instance, Bitcoin, the world’s largest cryptocurrency, was trading around $35,000 in the last 24 hours, down 21.82 per cent in the last seven days, according to Coinmarketcap data. Though the market has recovered slightly, last week's fall has wiped out over $1 trillion from the global crypto market value.
Other major currencies Ethereum, Cardano, Binance Coin (BNB) and meme coins such as Dogecoin (DOGE), Shiba Inu (SHIB) also witnessed similar meltdowns, data showed. In the last seven days, Bitcoin fell 21.25 per cent, Ethereum plunged over 31.16 per cent, Binance Coin (BNB) fell 228.04 per cent, showed Coinmarketcap.com data. Among meme coins, Dogecoin (DOGE) fell over 24 per cent, Shiba Inu was down by 33 per cent in the last seven days, while Dogelon Mars (ELON) fell over 48 per cent.
Single day falls on Monday were also huge, with BTC falling over 6 per cent, while ETH losing 10 per cent in the last 24 hours. DOGE fell over 7 per cent, SHIB 12 per cent and ELON 11 per cent over the same period.
Why Are Crypto Prices Falling?
There were multiple reasons that is leading to the fall.
Most recently, on January 21, the Central Bank of Russia proposed to the government to ban all use and mining of cryptocurrencies in Russian territory. “Global tech stock sell-offs coupled with the news of the Russian central bank banning cryptocurrencies and Kazakhstan crackdown on crypto mining have added to mayhem and bloodbath on crypto markets,” says Sharat Chandra, vice-president, research and strategy, EarthID, a global decentralized self-sovereign identity management platform.
Moreover, last week, the European Securities and Markets Authority recommended a ban on Proof of Work mining and suggested that regulators should opt for Proof of Stake mining, which also led to the downfall in the crypto market.
Also, the US Federal Reserve has been tightening its monetary policy controls, which is exerting pressure on risky financial instruments, including digital assets.
“Investors across financial markets are de-risking their investments to the US dollar and bank deposits driven by fears of interest rate hikes by the US Federal Reserve this year as well as continued curbs globally because of the rise of the Omicron variant of Covid,” says Vikram Subburaj, CEO, Giottus Crypto Exchange.
In addition, last week, the regulators of the United Kingdom, Spain and Singapore tightened the rules on crypto-asset promotion.