Bitcoin in the crosshairs. What Russia’s proposed ban could mean: expert

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Key Points Bitcoin down 26% in 2022Crypto market at risk of ban in RussiaWhat is the likely impact of a Russian ban on Bitcoin?

Bitcoin (CRYPTO:BTC) took a beating in the new year.

Despite rising 4% since yesterday at this time, currently trading at US$36,377, the world’s top crypto is down 26% so far in 2022. And it’s now down 47% from to its historic highs on November 10, 2021.

This gives Bitcoin a market capitalization of $686 billion, up from nearly $1.3 trillion in November, according to data from CoinMarketCap.

Interest Rates and Regulatory Headwinds

Bitcoin and most major altcoins have sold off as crypto investors watch for prospects of higher, faster and more aggressive interest rates than most expected just a few months ago.

In addition to concerns about the rising cost of silver, the crypto market is facing new headwinds from Russia.

Last week, the Central Bank of Russia suggested the government ban the mining and trading of Bitcoin and all other cryptocurrencies within Russian borders. The bank said Bitcoin and cryptos pose a potential risk to the ruble. He added that crypto trading is akin to a pyramid scheme.

With Bitcoin already hammered in the global risk asset sell-off, what could Russia’s proposed ban mean?

For insight into this question, we turn to Simon Peters, market analyst at global crypto platform eToro.

Russia may ban Bitcoin mining

Commenting on Russia’s proposed blanket ban on cryptos, Peters said, “Russia imposing a blanket ban on Bitcoin mining may well impact its hashrate and price in the short term. However, I don’t think it will be a long-term headwind.

Peters said Russia’s relatively small share of the Bitcoin mining pie should minimize any major price declines:

Russia is only responsible for around 11% of the global hashrate. This is in stark comparison to China, which when it banned bitcoin mining in May 2021, mining operations based there accounted for 60-70% of the Bitcoin network’s global hashrate.

When these China-based miners went offline due to the ban, the hashrate dropped significantly along with the price. But as these miners moved to other countries and jurisdictions, the hashrate rebounded and is now at an all-time high.

“If Russia bans Bitcoin mining,” Peters added, “we might well see a similar pattern, but to a much lesser extent.”

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