Bitcoin tumbles past $40,000, altcoins follow

Posted: 21 January 2022 12:36 pm
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Bank of Russia signals a potential ban on cryptocurrencies.

The selloff of Bitcoin continues after it reached all-time highs over $68,000 in November. Earlier this month, the price dipped below $40,000 but recovered. Today, however, we’re seeing the price drop even lower.

How low can bitcoin go?

In a recent article, I shared my technical analysis predicting how far Bitcoin (BTC) may potentially drop. Based on the head and shoulders pattern, Bitcoin can drop as low as $30,000. The nearest strong resistance level below $40K, though, is $35,000. A break below this number likely means even more losses for Bitcoin. In this case, the price may drop to $30,000, a strong resistance level.

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Altcoins are tagging along

The cryptocurrency selloff continues across the board. Ethereum (ETH), the second-largest cryptocurrency, dropped 11% in a 24-hour period, while Binance Coin (BNB) dropped 10%. Most cryptos in the top 20 by market cap are also down by roughly 10%.

What’s causing the drop?

There can be many reasons for the continuous slide of Bitcoin. For this particular leg down, it could be the consultation paper from Bank of Russia issued on Thursday.

“The growth of cryptocurrencies use creates threats for Russian retail investors, financial stability and threats associated with the use of cryptocurrencies for illicit activities,” says the paper.

To protect its citizens and Russian financial stability, the Bank of Russia proposes:

  • to ban cryptocurrencies as means of payment for goods, works and services.
  • to prohibit cryptocurrency exchanges and P2P platforms on Russian soil.
  • to prohibit financial institutions from investing in cryptocurrencies and related instruments.

The Bank also proposes a ban on crypto mining. Russia is the third-largest player in Bitcoin mining, behind the US and Kazakhstan.

They can enforce this by enhancing their monitoring of cryptocurrency transactions either through home regulators or foreign crypto exchanges.

Kliment Dukovski owns Bitcoin, Ethereum and Binance Coin as of the publishing date.

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