On Monday, the first cryptocurrency sank to the low of the summer of 2021 ($32,900) and was 50% lower than the November peak ($69,000). Against the background of the collapse of the leading digital asset, the securities of crypto companies also instantly and significantly lost in price.
The current decline in the BTC turned out to be the second largest after July 2021, when digital gold lost 54%. By the way, the spectacular decline of the cryptocurrency market in 2017 and 2021 did not exceed 20-40%.
Despite the fact that at the time of writing, bitcoin has significantly risen in price ($36,690) and still remains the world's leading crypto asset by market capitalization, experts confidently declare the onset of a protracted bearish trend of the BTC.
Analysts call the upcoming meeting of the Federal Reserve, scheduled for January 25 and 26, the main downward factor for the crypto asset market. Investors expect that the US central bank will announce its readiness to raise the base interest rate and finally curtail quantitative easing programs in March.
The prospect of tightening the Fed's policy, experts believe, will lead to the weakening of bitcoin as a currency, an inflationary hedge and a risky asset. At the same time, the actual decline in the cryptocurrency market will be played out for many more years against the background of investors rethinking virtual assets.
Another incentive for the fall of the stock and cryptocurrency markets was the aggravation of the geopolitical situation between the United States and Russia. Thus, investors are anxiously watching the growing tension around Ukraine and the complication of relations between Russia and the West.
Last weekend, the U.S. Department of State decided to reduce the number of embassy staff in Ukraine amid military threats from the Russia. On Monday, the British authorities also began withdrawing some employees of their embassy and their family members from Ukraine.
Tough regulatory measures to streamline the rules for trading digital assets around the world also have negative pressure on the state of the cryptocurrency market. Last week, the Central Bank of Russia proposed to ban all operations with virtual currency on the territory of the state, stating that the increase in the digital asset market "is supported by demand from newly entering the market participants."
In the middle of last week, the Financial Conduct Authority of the United Kingdom announced its intention to restrict advertising of virtual currencies against the background of increased control over the crypto asset market in Singapore, Italy and Spain.
By the way, the large-scale collapse of the digital coin market provoked a decline in the US stock market. Thus, the basket of shares of cryptocurrency companies formed by Goldman Sachs decreased by a third in 2022. The largest cryptocurrency exchange Coinbase, whose securities are traded on the US stock exchange, sank by 13% on Monday, and software developer MicroStrategy, which invests in bitcoin, lost more than 17%.
Today, experts are seriously talking about the crypto winter and the approaching collapse of the virtual asset market. Thus, analysts of the US investment company Invesco are confident that in the coming year, the MTC risks falling to $30,000. Economist Benjamin Cohen believes that in the near future the value of digital gold may even drop to the level of $20,000, which investors will actively use for purchases.
More optimistic experts, including Maria Stankevich, an analyst at the EXMO cryptocurrency exchange, believe that in the near future, the BTC will trade at $34,000-$36,000.