Bitcoin’s collapse to $35 000 and new restrictions for Russians. Key events of the week

The bitcoin exchange rate has fallen by 8,29% over the past seven days. The asset reached the highest values on May 4, when 1 BTC was trading at $40 023, the lowest values were recorded on May 5, at $35 571 per coin. As of May 6 at 12:00 pm Moscow time, the bitcoin exchange rate is $36 291 (according to Binance).

The second-largest cryptocurrency by capitalization, Ethereum, has dropped by 6,51% over the past seven days. The native token of the Binance cryptocurrency exchange (BNB) fell in value by 6,48%.

The total capitalization of the crypto market fell from $1,79 trillion to $1,67 trillion over the week, with bitcoin dominating at 41,5%. Ethereum’s share is 19,8%. As can be seen on the infographic of the Coin360 portal, most of the assets are in the red zone on May 6.

Source: Coin360.com

New restrictions for Russians

Last week, a number of exchanges and services announced the introduction of restrictions for users from Russia. On May 5, clients of the US cryptocurrency exchange Coinbase received notifications from the support service. They informed about the imminent restriction of access to accounts due to European sanctions. The restrictions affected Russian citizens, residents, and legal entities. Such users must withdraw their assets from the platform “by 8:01 Moscow time on May 31, 2022,” the notifications say. In addition, the exchange’s representatives advised not to transfer additional funds to Coinbase accounts, as they may be blocked amid sanctions restrictions.

Also on May 5, it was reported online that Bitstamp started blocking Russians without the possibility of withdrawing funds. A Reddit user from Russia under the nickname jb64w reported that his account on the European exchange had been blocked, while the platform’s tech support referred to the events taking place in Ukraine.

The US Congress came up with a new proposal. The bill from Congressman Brad Sherman implies a ban on US and foreign cryptocurrency exchanges from facilitating transactions with cryptocurrency addresses in Russia. In addition, the US president may get the power to impose restrictions on foreign platforms that facilitate transactions by Russian entities and sanctioned individuals.

Bitcoin price predictions

Several publications this week have focused on predictions for the future movement of the bitcoin price. Crypto analyst PlanB, who developed the Stock to Flow (S2F) prediction model, adjusted a possible scenario for the bitcoin exchange rate growth. According to the updated data, the value of BTC would reach $55 000 by the summer of 2022. The analyst stated that the 2019 S2F model better fitted the current data than the later version.

A crypto analyst known under the pseudonym Pentoshi predicted a rise in the price of bitcoin and tech stocks. In his view, this would happen as soon as news from the Federal Open Market Committee (FOMC) meeting of the US Federal Reserve System (Fed) reached the market. Pentoshi noted how many tech stocks were at their lows since 2020. Among them are Spotify, Netflix, Zoom, and PayPal. Pentoshi expects the situation to change after the Fed announces a new round of interest rate hikes.

Trader and Factor LLC CEO Peter Brandt predicted a decline in the price of bitcoin to $28 000. In his view, this is indicated by the pattern that bitcoin has been forming since mid-February. Brandt noted that the completion of a “bear” channel usually leads to a decline equal to its width, and in this case, a drop in price to $32 000 or even $28 000. The expert stressed that such a prediction does not make him a “hater of bitcoin.”

Standard Chartered analyst Geoffrey Kendrick predicted the growth of BTC and ETH to $100 000 and $10 000 respectively in 2022. According to Kendrick, bitcoin can reach the upper end of its predicted price if the cryptocurrency eventually becomes a globally recognized store of value. Ethereum should benefit from an upcoming upgrade and switch to Proof-of-Stake (PoS). The final Kiln testnet was launched in March. This is the last public test network before the move to PoS.

Capital outflows from bitcoin funds

Bitcoin funds faced the biggest weekly capital outflow since June 2021, with a total of $133 million withdrawn from the funds in just a week. The data comes from the latest version of CoinShares’s analytical report. The company notes that $132,7 million was withdrawn from bitcoin funds a week earlier, and a total of $310,8 million in the past month. The outflow of funds from Ethereum funds amounted to $25 million.

CoinShares attributes this to the tightening of the monetary policy by the US Federal Reserve System. The last time such sentiment in the market was in June 2021, then the outflow for the week amounted to $79 million. This was influenced by China’s introduction of a ban on mining and the cessation of Tesla car sales for bitcoins.

Adoption of cryptocurrencies in the world

Argentina’s two largest private banks, Banco Galicia and Brubank, allowed customers to trade cryptocurrency. Available assets include BTC, ETH, USDC, and XRP. Banco Galicia noted that this decision was due to high customer demand for digital assets. Earlier, the bank conducted a survey showing that 60% of respondents would like to have easy access to cryptocurrency through their financial institutions. In the case of both banks, cryptocurrencies would be purchased through the same platform that customers use to buy bonds or shares.

A Crypto Pulse report by the Bitstamp cryptocurrency exchange provides data that more than 80% of institutions predict cryptocurrencies as the main investment vehicle. Bitstamp surveyed the opinions of 5 500 institutional and 23 000 retail investors in 23 countries around the world. According to the exchange, 82,4% of institutional investors believe that cryptocurrencies will be widespread over the next ten years. Meanwhile, 70,4% of institutional investors expressed confidence in the cryptocurrency industry. 54,3% of institutional respondents reported storing more than 30% of their portfolio in cryptocurrencies and 62,8% trade or invest in digital assets at least twice a week.

Tesla said they believe in the potential of digital assets. The company submitted its 2022 first quarter earnings report to the US Securities and Exchange Commission (SEC). It says the company believes “in the long-term potential of digital assets both as an investment and also as a liquid alternative to cash.” According to the document, Tesla has cryptocurrency holdings totaling $1,26 billion.

Mining news

Uzbekistan’s President Shavkat Mirziyoyev issued a decree defining the rules for regulating cryptocurrencies and mining in the country. The main regulator of the industry will become the National Agency for Perspective Projects (NAPP).

The decree also defined a crypto asset as a property right that has a value and an owner and represents a set of digital records in a distributed data ledger. The turnover of crypto assets by individuals and legal entities will not be subject to taxation, however, the use of cryptocurrencies as a means of payment within the country remains prohibited. Starting from January 1, 2023, transactions with crypto assets can only be carried out through service providers: crypto exchanges, mining pools, crypto stores, and crypto depositories. All providers have to be registered as legal entities and have a license and permits from the regulator.

The decree also introduces a ban on the circulation of anonymous cryptocurrencies and hidden mining. Cryptocurrency mining carried out by a legal entity is considered legal. Miners are also required to register with the NAPP. For companies that provide farms with energy by installing solar panels, there are preferences as well as tax and customs benefits. Alternatively, they can connect to the grid on the condition that they pay double the tariff. However, they may be charged extra during peak consumption periods.

Kazakhstan set new requirements for miners. Individuals who plan to mine cryptocurrencies now need to notify the ministry and provide it with details. 30 days before the start of mining, the following must be provided: the contact details of the miner (including bank details), the required capacity to connect the equipment, the details of the devices, the amount of the planned investments, the IP address, information about the place of work and the document confirming the ownership of the equipment. In case of the termination of activity, it is also necessary to notify the regulatory authority within 10 days.

In Russia, deputies from the “New People” party Anton Tkachev, Vladimir Plyakin, Grigory Shilkin, and Sardana Avksentyeva submitted the draft law to the State Duma on the legal regulation of mining. According to the document, individuals will be allowed to engage in cryptocurrency mining, subject to registration as an individual entrepreneur or self-employed person. In addition, the draft provides for registration in the register of mining participants if their electricity consumption exceeds the limits set by the Russian government.

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