BusinessDay

Bitcoin drops to 6 month low as Russia plans ban, US tightens monetary policy

Bitcoin currently has lost almost a quarter of its value last year as it dropped to a six-month low on Saturday extending a steep fall recorded in the previous session as the cryptocurrency market was swept up in a powerful shift by investors out of speculative assets.

This steep fall in the crypto market came in the wake of Russia’s purposed crypto ban.

The price of the biggest digital token by market value fell 4.3 percent on Saturday morning to $35,127, the lowest level since July 2021.

The cryptocurrency crash reigned in on the back of investors dumping their shares in tech companies on the back of expectations of the US Federal Reserve tightening their monetary policy soon in order to combat inflation.

With investors forecasting the Fed’s interest rate rising three to four times its former rate, higher yields on low risk assets like US government bonds would make potential returns on speculative investments like cryptocurrency look less attractive and appealing.

Read also: Here’s why the price of bitcoin, other coins remain bearish

Uche Uwaleke, a professor of finance and capital market and president of the Association of Capital Market Academics of Nigeria stated that while an increase in US interest rates would cause major capital outflows from Nigeria, it would also have repercussions for Bitcoin holders’ within the Nigerian financial space.

” The impact of US interest rate is far-reaching, even beyond the capital market, it also has tentacles strung deep within the cryptocurrency space,” Uwaleke said.

The sharp decline in crypto assets also came a day after Russia’s central bank on Thursday announced its intent to ban all forms of crypto mining and trading within the Russian space, one of the world’s largest centers for crypto mining. The proposal had a lot of semblance with Nigeria’s policy on crypto currency which was enforced in February of 2021.

The announcement initially had an almost insignificant impact on bitcoin which rose by 3.7 percent against the dollar on Thursday. However by Friday afternoon, crypto currency had dropped by more than 10 percent from it’s previous days high to hit is lowest level since August and currently is lowest level since July on Saturday.

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