Cryptocurrency just had a terrible, terrible week

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It’s been a dramatic and trying week for the crypto faithful.

Over the past week, Bitcoin has abruptly fallen to half of its November value. The cryptocurrency, which had cost more than $67,000 per coin in November, fell from $42,369 on January 18 to $33,113 on January 24. Etherium reached $3,263 on the 21st and then fell to $2,159 on the 24th.

The crypto selloff may have been sparked by rumors that the US government will soon regulate digital currency. The market may also have reacted to the same thing that caused the stock market to sell off – fear that the Federal Reserve will soon raise interest rates. The current geopolitical instability in Europe caused by a possible Russian invasion of Ukraine adds to the anxiety.

As some have pointed out this week, buying crypto is betting on the future acceptance of the currency itself. This partly explains the dramatic rises and falls in the price of Bitcoin and other cryptocurrencies. Stock prices are subject to changing beliefs in the market, but their price is somewhat stabilized by their relationship to the financial performance of the issuing company.

Some have pointed out that this week’s sale is far from the first and will not be the last.

The Qubit incident was a breach of a private exchange, not the blockchain itself. Many people will not make this distinction.

“Even though Bitcoin has been declared dead in the mainstream media over 400 times, it keeps coming back,” Alex Tapscott, managing director of the Digital Asset Group at Ninepoint Partners, said in a statement Thursday. (This week, Sohale Andrus Mortazavi, writing for Jacobin, called cryptocurrencies a “giant Ponzi scheme.”) “Indeed, with each market cycle, Bitcoin has come back to reach a new high in terms of price and total market capitalization.

At least this week, falling cryptocurrency prices have followed falling stock prices, including tech stocks. On Wednesday, Federal Reserve Chairman Jerome Powell did the markets no favors by hinting that an interest rate hike is likely, although he gave no indication of the magnitude of the rise. increase or when it might occur. Powell focuses on slowing the booming economy as a means of controlling inflation.

Meanwhile, millions of crypto owners and potential buyers have wondered if now is the right time to “buy the dip” in the price of the currency. Bitcoin price has been hovering around $37,000 since falling to $33,113 on the 24th.

On Tuesday, the Federal Trade Commission released a report indicating that social media-based fraud increased 18 times in 2021. More than a third of scams were investment offers, the agency said, and many ‘among them involved cryptography. “People send money, often cryptocurrency, on promises of huge returns, but end up empty-handed,” the report said.

Then on Thursday, news broke that the Biden administration was set to order federal agencies to create regulations for digital currencies, including Bitcoin, as well as NFTs (non-fungible tokens). The Biden White House views cryptocurrency as a national security issue, Barron reports.

Finally, on Thursday night, decentralized finance platform Qubit confirmed reports that a hacker (or hackers) had stolen $80 million in crypto. Qubit, which allows users to speculate on cryptocurrency price changes, has now found the location of the stolen crypto’s blockchain and is offering hackers a bounty in exchange for its safe return.

The Qubit incident was a breach of a private exchange, not the blockchain itself. Many people will not make this distinction. It will be seen as the latest in a week-long series of events that have degraded confidence in crypto in general. But for many of us staying on the sidelines with crypto FOMO, it was a week to feel relieved about what we missed out on.

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