It was a dramatic week for bitcoin and the wider cryptocurrency market.
Bitcoin fell to a more than three-month low, in part due to broader weakness in markets after minutes released by the US Federal Reserve sparked a sell-off, but also because Kazakhstan, a prominent player in the cryptocurrency mining world, shut down the country’s internet.
Here are the top stories that caught our eye.
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Bitcoin falls to its lowest in more than three months
Bitcoin fell to its lowest in more than three-months today, bottoming at just above $41,000, after the prospect of tighter monetary policy weighed on the cryptocurrency.
The minutes from the Fed’s December meeting released on Wednesday indicated that the world’s most powerful central bank is getting increasingly worried about higher levels of inflation – and interest rates could rise more quickly than expected.
Market watchers fear that the faster-than-expected interest rate hikes would reduce liquidity in several asset classes, including cryptocurrencies.
Kazakhstan’s internet shutdown is bad news for bitcoin mining
Bitcoin also came under pressure this week because of violent clashes in Kazakhstan between the army, police and protestors.
The crisis which began at the weekend, prompted by rising fuel prices, has erupted across the country in recent days.
As a result, Kazakhstan shut down the internet on Wednesday. The move which was initially intended to thwart protestors’ communications, has reverberated across the cryptocurrency market.
Kazakhstan is a key player in bitcoin mining - the process by which new cryptocurrencies units are minted and created. Last year, it became the world’s second-biggest centre for bitcoin mining, says the Cambridge Centre for Alternative Finance.
Kazakhstan lags behind only the US in terms of biggest crypto mining centres in the world. As of August last year, it accounted for 18% of the world’s global bitcoin mining, says Fortune.
Last year, China took a range of aggressive measures aimed at curbing cryptocurrencies, including banning cryptocurrency mining, a move that surprised many as the country had accounted for 65% of the world’s mining.
Kosovo bans cryptocurrency mining amid energy crisis
As well as the disruption in Kazakhstan, Kosovo banned crypto mining on Tuesday in an effort to reduce electricity consumption. The country is enduring its worst energy crisis in a decade.
Energy prices are rising fast in Europe for numerous reasons, including reduced supply from Russia and unprecedented demand for natural gas.
On top of this, Kosovo’s state largest coal fired power plant was forced to shut down last month because of a technical issue. This has prompted the government to import electricity at very high prices.
Cryptocurrency crime reaches its highest level in 2021
Crime using cryptocurrencies took place at its highest level last year, hitting an all-time high of $14bn in 2021, research by blockchain company Chainlysis said in a report this week.
Chainlysis said losses generated from illegal cryptocurrency activities was 79% higher than the previous year.
Scamming and theft were the two biggest forms of cryptocurrency crimes.
The blockchain company said decentralised finance (deFi), a booming sector of the cryptocurrency market which aims to eliminate third parties such as banks, played a key role in fostering greater cryptocurrency crime.
“DeFi is one of the most exciting areas of the wider cryptocurrency ecosystem, presenting huge opportunities to entrepreneurs and cryptocurrency users alike,” the report says. “But DeFi is unlikely to realise its full potential if the same decentralisation that makes it so dynamic also allows for widespread scamming and theft,” Chainalysis said.
Markets
Here’s what happened to five of the largest cryptocurrencies by market cap – according to data compiled by Coinmarketcap – in the last seven days:
- Bitcoin fell 11.8% to $42,405.
- Ether fell 14.2% to $3,253.
- Tether was flat at $1.
- Binance Coin fell 12.9% to $456.
- Solana fell 19.4% to $142.
What you need to watch out for
GameStop, the video game retailer which was at the fore of the “meme stock” trading frenzy last year, is reportedly launching a division to create a marketplace for non-fungible-tokens (NFTs) and to build cryptocurrency partnerships, the Wall Street Journal reported on Thursday.
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Spot the Dog: £67bn in underperforming funds revealedAround 137 funds consistently underperformed their benchmark, BestInvest's Spot the Dog report finds. Which funds are in the dog house?
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What does a BP and Shell merger mean for the UK oil industry?BP’s struggles have made it vulnerable to a takeover. Could it merge with Shell to create a British behemoth?
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FCA to force “cooling-off period” for new crypto investorsNews Firms will have ensure investors have the appropriate knowledge and experience to invest in crypto as the FCA cracks down on the industry.
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Coinbase’s USD stablecoin – what is it and why should you use it?Advertisement Feature USD Coin – a stablecoin created by cryptocurrency exchange Coinbase – offers a safer way to invest in and hold cryptocurrency. Here’s what it is and how it works.
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Gold or bitcoin: what will replace the US dollar?Analysis As Russia and the West move further apart, there’s a growing need for a new global reserve currency. The US dollar could soon be replaced by gold or bitcoin, argues Dominic Frisby.
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15 ways bitcoin makes the world betterAnalysis What problem does bitcoin solve? How does it make the world better? Dominic Frisby shares his view.
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The cautionary tale of FTX and the future of bitcoinAnalysis The collapse of FTX has fractured the crypto market, but bitcoin will survive the fallout, argues Dominic Frisby.
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Paypal, bitcoin, and the weaponisation of moneyNews Recent events have shown how both business and governments can “weaponise” money and shut down dissent. What to do? Buy bitcoin, says Dominic Frisby.
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Three cryptocurrency funds for the adventurous investorTips The crypto sector is extremely risky, but these three cryptocurrency funds may appeal to adventurous investors who anticipate a rebound, says David Stevenson.
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Michael Saylor: the tech mystic who bet it all on bitcoinProfiles Michael Saylor, the founder of data analytics company MicroStrategy, has pursued the odd strategy of placing the whole firm on red at the roulette table that is bitcoin. Where will the ball finally land?
