Cryptocurrency Market Review
This week, the cryptocurrency market remained calm, and leading assets made minor attempts to increase or decrease. BTC is currently trading around 37000.00 (+4.5%), ETH is at 2430.00 (–0.5%), USDT is around 1.0006 (–0.01%), BNB is at 390.00 (+2,0%), and USDC is around 0.9997 (–0.04%). The total market capitalization decreased to $1.669T, while the share of BTC rose to 41.94%.
The fears of several experts of a further serious fall in the cryptocurrency market after the meeting of the US Federal Reserve did not materialize. The American regulator confirmed its “hawkish” positions but did not hint at their further strengthening, which could cause additional pressure on alternative assets. Officials only announced the upcoming rate hike by 0.25% and the start of the balance sheet reduction program, but investors have been expecting this for a long time and therefore included this scenario in the price.
Russian news also became a positive factor for the market. The Ministry of Finance opposed the proposal of the Bank of Russia to ban the mining and use of cryptocurrencies in the country. On the contrary, officials propose introducing regulatory rules for the crypto-currency sector, providing for the conduct of transactions with digital assets through banks and the full identification of users. Otherwise, 2T rubles (the estimated value of cryptocurrencies owned by citizens) will go to the shadow sector of the economy. Also, the ministry did not rule out the possibility of foreign cryptocurrency exchanges operating in the country, which will have to create representative offices in the Russian Federation and cooperate with the local banking system.
Of greatest interest is the idea of legalizing cryptocurrency mining in regions with an excess of electricity. The implementation of this proposal may contribute to the additional development of mining in the country, although now it is one of the three world leaders in terms of BTC production after the USA and Kazakhstan, accumulating more than 10% of the world hashrate.
Among other news of the cryptocurrency industry, it is worth highlighting the possible completion of the Diem stablecoin project from Meta Platforms Inc. Previously, it was named Libra and was subjected to severe pressure from the US authorities, who did not want such a large private currency to enter the market.
According to Bloomberg, Diem Association members are currently considering selling intellectual property and other assets to cover investors’ costs partially. In parallel, there is a process of gradual dismissal of employees. The issuance of Diem by Silvergate Bank was supposed to start this year, but the financial institution did not receive approval for this activity from the US Federal Reserve, which was probably the reason for curtailing the project.
This week, the US Securities and Exchange Commission (SEC) rejected an application from Fidelity Investments to register a spot bitcoin ETF called the Wise Origin Bitcoin Trust. The officials made the standard argument that spot market investors would not be adequately protected from fraud to justify the refusal. The SEC has previously approved bitcoin futures ETFs, and experts hope that the approval of spot funds will also become possible soon.
In conclusion, we note that according to Bloomberg, the US administration plans to publish a state strategy for cryptocurrencies in February. The paper will address economic, regulatory, and other issues related to digital assets.
Next week, quotes of most cryptocurrencies may consolidate or resume their decline.