Cryptocurrency’s price plunged below $35,000 for the first time since July
The world’s biggest digital asset, Bitcoin, fell as low as $34,042.78 on Saturday, marking a drop of 7.2%. It has recovered most of those losses, and was trading at $35,445 at 14:19 GMT. Other cryptocurrencies saw declines as well, with Ethereum down 12%. Solana and Cardano each dropped at least 17%, according to Coinbase.
“Margin positions being liquidated caused a wave of additional sell pressure, as assets that had been held as collateral were forcibly sold to pay for margin loans,” Hayden Hughes, chief executive officer at Alpha Impact in Singapore, told Bloomberg.
The expert expects the cryptocurrency to take some time for a bottom to form and for confidence to return, before projecting any sort of bullishness.
Bitcoin’s downfall from its all-time high of nearly $69,000 in November has erased some $600 billion from its market value, and more than $1 trillion has been reportedly lost from the aggregate crypto market. According to Bespoke Investment Group as quoted by the agency, this marks the second-largest-ever decline in dollar terms for both, while there have been much larger percentage drawdowns for both Bitcoin and the aggregate market.
The slump in both cryptocurrencies and stocks was caused by the latest move by the US Federal Reserve to tighten monetary policy at a faster pace than expected. In an effort to revive the economy, the Fed may increase key interest rates three times this year, according to Reuters polls.
The cryptocurrency market has also been rocked by China’s crackdown on virtual currencies, as well as Russian moves of a similar nature. Last year, Beijing prohibited cryptocurrency mining in the Sichuan Valley, triggering an adverse impact on the market.
The country now has the world’s fourth-largest forex holdings
Russia’s foreign exchange reserves surged by $7.7 billion last week, with its total holdings reaching a record $638.2 billion, according to the country’s central bank.
From January 7 to 14, its international reserves grew by 1.2%, according to the latest data from the regulator. On January 7, their volume had amounted to $630.5 billion.
The surge was reported to be the result of planned purchases of foreign currencies and a positive market reassessment.
The increase has seen Russia move up from fifth to fourth place in the tally of the world’s largest foreign reserve holders. The change is also due to India – which previously held the fourth-largest reserves – having reduced its stockpile during the first week of January. The ranking may change yet again when other nations update their figures.
Russia’s international reserves consist of monetary gold, foreign currencies, and special drawing rights, the last of which are at the disposal of the central bank and the government.
Over the past six years, the central bank has nearly doubled its reserves. They had plunged to $356 billion in 2015 due to the government’s efforts to bail out the economy during the 2014 oil price crisis.
Soaring prices for fuel and low gas storage levels force Brussels to ‘improve risk-preparedness’
The European Union is in talks with its trading partners in search of viable options to increase supplies of natural gas to its member states, according to the bloc’s Energy Commissioner Kadri Simson.
“The gas storage levels in the EU are significantly lower than usual at this time of the year,” Simson said, after a meeting with European energy ministers in France on Saturday.
The energy chief added that EU authorities need to remain “extremely vigilant” to make sure the bloc is ready for emergency situations at a time of unusually low gas storage levels, along with increased tensions beyond its eastern borders.
“The Commission is also discussing with our partners the potential to increase supplies to Europe,” she added.
Last year, Europe was hit by an unprecedented energy crunch that sent gas and power prices skyrocketing, and forced several industrial giants in the region to curb production, while households had to struggle with persistently rising bills for electricity and heating.
The severe energy crisis has recently been exacerbated when storage tanks in the EU dropped to their lowest seasonal levels in more than ten years. The decline reportedly occurred due to longer-than-usual maintenance at Norwegian fields and to Russia restocking its own inventories.
Moreover, the latest speculation over probable military conflict between Russia and Ukraine is also fueling concerns about Russian gas supply. The US and Western allies have pledged to impose a new series of sanctions against Moscow in the event of an invasion. The sanctions may reportedly target Russian energy sales.
“My message is that Europe has a robust, well diversified and resilient gas infrastructure and clear procedures of solidarity in case of emergencies,” Simson stressed, calling for even stronger solidarity between member states.
According to the European Commission, among the bloc’s 27 member states, 22 have implemented the necessary steps to cushion the impact of the energy crisis, such as lower taxation and duties, direct income support and vouchers.
Such measures have reportedly helped some 70 million individual customers and several million small- and medium-sized companies.The bloc’s authorities are also discussing draft rules to improve their coordination on gas storage, as well as to enable voluntary purchases of strategic gas reserves. EU member states have also been seeking to reform its power market.
UK government believes Russia is allegedly planning to invade Ukraine
British authorities are reportedly considering “an opportunity to support the suspension of Russia from the SWIFT international payment system, citing a hypothetical military conflict that could erupt between Russia and Ukraine.
Prime Minister Boris Johnson “fears some world leaders may not appreciate the deteriorating picture on the Ukrainian border, or fully comprehend the risks posed by a bullying Russia,” The Telegraph reports, citing sources close to the leader.
Over the past few months, a wide range of Western media outlets, along with multiple US officials, have been spreading speculation about an imminent Russian invasion of Ukraine. Washington and its allies threatened Kremlin with a new round of ‘crippling’ sanctions if this happens, citing the movement of Russian troops within the country’s vast Western territory as evidence of the plan. Moscow has consistently rejected the allegations, saying that Russia has a right to carry out military maneuvers as it pleases within its borders.
According to the British premier, the potential sanctions against Russia “cannot exclude” Nord Stream 2, the widely debated pipeline that is designed to increase gas supplies to crisis-hit European nations and is currently stuck in a protracted EU certification process.
Johnson is reportedly due to hold calls with G7 leaders to finalise a “sanction coalition” to introduce targeted measures against Russia.
Earlier this week, Bloomberg reported that officials at the UK Foreign Office were told to be ready to move into “crisis mode” at very short notice, as “concerns that Russia’s aggression toward Ukraine could escalate into conflict” increased. That reportedly means that officials and diplomats would focus their work on the UK response to any further spike in tensions, including deterrence and sanctions.
On Saturday, London’s Foreign Office issued grotesque claims that Moscow was plotting to “install a pro-Russian leader in [Kiev] as it considers whether to invade and occupy Ukraine.” Russia’s Ministry of Foreign Affairs has dismissed the claim, urging the UK to stop spreading “nonsense” and “disinformation.”
The idea of cutting Russia off the SWIFT banking network was reportedly considered as one of the options to punish Russia for the military assault they have been warning about, but was rejected by EU and US politicians, Das Handelsblatt reported earlier this week, citing sources close to the matter. The measure might reportedly result in a destabilization of financial markets in the short term and, in the medium term, in the development of an alternative payment infrastructure.
US financial regulator intensified its crackdown on crypto in recent years
A report by Cornerstone Research shows that the US Securities and Exchange Commission (SEC) has brought a total of 97 enforcement actions worth $2.35 billion against participants in the digital asset marketplace since 2013.
According to the research, 58 of those actions were litigations and the remaining 39 were administrative proceedings. Of the total $2.35 billion in penalties, $1.71 billion was charged in litigation and $640 million in administrative proceedings.
The majority of those charged were “firm respondents only,” racking up $1.86 billion of the total. Individual respondents were charged the remaining $490 million.
“Of the 20 enforcement actions brought in 2021, 65% alleged fraud, 80% alleged an unregistered securities offering violation, and 55% alleged both,”the report noted.
According to the document, the recent crackdown on crypto may be linked to the appointment of SEC chair Gary Gensler in April 2021, as enforcement had been “notably high” between the end of May and mid-September.
Those tough measures are expected to continue into the new year, Cornerstone Research Vice President Abe Chernin said. “Given the SEC’s continued focus on this space, in 2022, we may see further scrutiny of certain market participants such as DeFi platforms.”
