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Bitcoin and crypto stocks plummet on news of Russian trading and mining ban



Shares of major cryptocurrency trading platforms fell sharply today after bitcoin fell below $ 39,000 due to reports of an impending trade and mining ban in Russia. Coinbase lost 5.6% in pre-market trading, Marathon Digital (MARA) fell 8.18%, Riot Blockchain (RIOT) fell 8.7%, MicroStrategy (MSTR) fell 8.49% and Bit Digital (BTBT) fell 5.85%, wrote Barrons. (adsbygoogle = window.adsbygoogle || []).push({});

The miners moved to Russia after the Chinese ban

After China intervened against cryptocurrencies last year, banning all transactions and cryptocurrency mining, the miners flocked to Russia and Kazakhstan. Together with the USA, they are the three largest countries in bitcoin mining.

Russia seems to have noticed this, after the energy crisis in Kazakhstan, which was at least partially caused by mining. On Thursday, the central bank issued a statement that provoked at least a bad market reaction.

The growth of cryptocurrencies is a threat

Russia’s central bank has warned that cryptocurrency growth is a threat to retail investors and may soon ban the production and trade of digital assets.

The bank issued a consultation paper entitled “Cryptocurrencies: Trends, Risks and Regulations”, in which it wrote that the volume of transactions of Russian citizens with cryptocurrencies is estimated at $ 5 billion per year. Russian individuals are active users of online cryptocurrency trading platforms, and Russia is one of the global leaders in terms of mining capacity.

Limited use cases

The bank writes:

In the long run, the potential for using cryptocurrencies for settlement seems limited. The rapid growth of their market value is mainly supported by speculative demand and expectations of further growth in their prices, which leads to the creation of a market bubble. Cryptocurrencies also have signs of a financial pyramid, as the rise in their prices is largely driven by demand from new market entrants.

Grow cryptocurrencies the use poses threats to Russian retail investors, financial stability and threats associated with the use of cryptocurrencies for illegal activities.

They emphasize the following risks:

  1. High volatility and spread of fraud

  2. Cryptocurrencies limit the sovereignty of monetary policy

  3. Cryptomets are widely used in illegal activities

The bank is also concerned that the popularity of cryptocurrencies could lead people to withdraw their savings from the Russian financial sector and reduce its ability to finance the real sector. They conclude that it is not possible to ensure full transparency of cryptocurrency transactions.

Global consequences

Subsequently, cryptocurrency-related stocks fell in Europe as well. The biggest loser was Argo Blockchain with losses of over 10%. Arcane Crypto lost 4.43% and Online Blockchain fell 7.49%. At the time of writing, bitcoin has been trading for $ 38,750, a decrease of more than 10% in the last 24 hours.

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