Cryptocurrency roundup: a bad week for most – but bitcoin bounced
China cracks down on crypto again, dogecoin is volatile as ever, and cybercriminals are flocking to monero. Saloni Sardana rounds up what happened in the crypto world in the last week – and what you need to keep an eye out for in the next.
The last week offered plenty of excitement in the cryptocurrency world. Much of the week was spent with crypto markets reacting to China’s intensified crackdown on cryptocurrency activities. A number of cryptocurrencies were in freefall following the news.
Here are some of the top stories that caught our eye.
Crypto crash triggered by China’s policy
China is cracking down hard on cryptocurrencies. In the last week alone China’s Sichuan provincial government ordered 26 of the largest cryptocurrency mines to stop operating until authorities conclude an investigation and banks have been told not to deal with crypto.
China’s several banks sent a scathing warning to many of its state-owned banks as well as to Alipay owned by billionaire Jack Ma to “investigate and identify” accounts showing any signs of crypto activity.
As for our own central bank, Merryn spoke to Andy Haldane, the Bank of England’s outgoing chief economist (yesterday was his last day) on the MoneyWeek Podcast. He has a few choice things to say about bitcoin (he’s not a fan), stablecoins and central bank digital currencies – listen to it here.
Many cryptocurrencies tanked on the news. Bitcoin fell below the $30,000 mark with market watchers speculating whether the bellwether cryptocurrency will break other support levels. It has bounced back since, however – and indeed is the only crypto to have risen in the last seven days. Earlier this week, Dominic looked at whether it’s found its floor - or whether the rout has further to go.
Has dogecoin’s bubble burst?
Dogecoin, the joke cryptocurrency, suffered a tumultuous week. It fell 36% on Monday and prices remained volatile for much of the week after. The cryptocurrency has staged a breathtaking rally in recent months due to some of Elon Musk’s bullish tweets and risen with broader cryptocurrencies. But now investors may realise the bubble may have finally burst.
It is worth looking at the excess by which dogecoin rises or falls compared to other cryptocurrencies. The meme cryptocurrency is hyper-sensitive to market movements and has a tendency to rise more than other cryptocurrencies and tank more than others following some market moving news.
Cybercriminals abandon bitcoin in favour of monero
Bitcoin has long been a favourite of cybercriminals to use for criminal activities, but a report suggests they may be abandoning the popular cryptocurrency for another one.
While bitcoin transactions are reflected on the underlying blockchain, a niche “privacy coin” called monero is gaining traction as its ability to conceal both the sender and receiver is appealing to cybercriminals, the Financial Times says.
The rise of monero comes on the back of weaknesses highlighted in the Colonial Pipeline hack incident of last month. The incident involved the hacking of America’s largest pipeline by the hacking group Darkside.
Once DarkSide encrypted Colonial’s data, it demanded cryptocurrency payments as ransom in exchange for giving Colonial Pipeline a decryption tool to unlock the systems that DarkSide hackers had brought to a standstill. Colonial Pipeline paid almost $5m to the hackers as a result.
“We’ve seen ransomware groups specifically shifting to monero,” Bryce Webster-Jacobsen, director of intelligence at cyber security group GroupSense told the FT.
Crypto Markets Update
Here’s what happened in the crypto market over the last seven days
- Bitcoin up 6.5% to $33,274
- Ether down 17.9% to $1,865
- Dogecoin down 13% to $0.25
- Cardano down 10.3% to $1.30
- Binance Coin down 15.9% to $290
What investors need to watch out for next week
Pay attention to the price of ether
Ethereum’s London update is coming in July, which involves two new Ethereum Improvement Proposals (EIPs). EIP-1559 is the one investors should pay most attention to as it will result in reduced supply for tokens and a significant change to transaction fees.
The price of ether could remain supported in the run up to the update.
Any Fed guidance on interest rate hikes
And much of this week has been about Fed “mania”. The Federal Reserve, the US central bank, stunned markets last week when it said it may raise interest rates in 2023, sooner than expected. But Fed officials have been ambiguous and contradicted each other in recent days. John Williams, president of the Federal Reserve Bank of New York said this week the US economy is not ready to withstand higher interest rates. Higher interest rates can make holding non-interest yielding cryptocurrencies less attractive.
We’ll have a lot more on all of these topics in upcoming issues of MoneyWeek magazine. If you’re not already a subscriber, you can get your first six issues plus a beginner’s guide to bitcoin, absolutely free here.