- When Russia’s central bank proposed a sweeping ban on crypto activity on Thursday, digital assets barely skipped a beat.
- Bitcoin even rose by around 5% at one point during New York trading hours.
- “There are bigger concerns right now in crypto right now,” DailyFX’s Chris Vecchio told Insider.
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When Russia’s central bank proposed a sweeping ban on cryptocurrency activity on Thursday, digital assets barely skipped a beat.
Bitcoin even rose by around 5% at one point during New York trading hours.
“There are bigger concerns right now in crypto,” Chris Vecchio, senior strategist at exchange firm DailyFX, told Insider. “What’s happening is much more closely tied to global stimulus conditions and central banks pulling back in the pandemic era. That, to me, is the prevailing story here.”
The news from Moscow came amid a rout in US stocks as investors continued to worry about warmongering Federal Reserve and high inflation.
Vecchio said the bitcoin movement was separate from Russia, highlighting how the crypto market over the past few months has moved in conjunction with US stocks, especially high-growth, low-profit tech stocks.
This momentum showed on Friday, when bitcoin plunged as much as 10% to hit a six-month low below $38,000 as investors continued to sell speculative crypto and tech stocks in anticipation of the downturn. Fed benchmark rate hike later this year.
In explaining bitcoin’s muted reaction to the threat from Russia, some pundits also pointed to China’s aggressive crackdown on crypto last year that prompted a massive token sell-off.
“We do not care?” Alex Lemberg, CEO of Nimbus, a decentralized finance platform, told Insider. “When the biggest guy in the class punches you in the face, you don’t really care about the little ones.”
It was China’s ban that really stunned the industry, he said. The Asian superpower, after all, was the biggest bitcoin mining nation in the world at the time, according to Data from the Cambridge Center for Alternative Finance. (Russia, on the other hand, ranks only third.)
But following Beijing’s declaration, miners quickly migrated to the United States, which is now the world’s top mining nation with a third of the global hash rate. China’s global hash rate, meanwhile, fell to zero, from 44% at that time. Hash rate is a key measure of the computing power needed to support the network and create bitcoins.
“I think Russia’s crypto ban isn’t a big deal in the long run because other countries, which are more accepting of digital assets, will benefit from Russia’s decision,” Insider told Insider. Marcus Sotiriou, analyst at digital asset broker GlobalBlock. “Minors will potentially be able to relocate if they have to, which ultimately means minors in receiving jurisdictions will benefit.”
The bitcoin hash rate on Friday reached an all-time high, suggesting a full resumption of the crackdown in China. And if Russia implemented its own ban, the network would have to stage a similar bounce.
Russia released a report on Thursday warning that the speculative nature of digital assets has led to a bubble. The central bank has proposed three amendments to the country’s existing regulations: banning crypto as payment for goods, banning the organization and issuance of crypto, and banning financial institutions from investing in crypto.
“These are suggestions to lawmakers and not tied to any tangible outcome, and the market has learned to read these statements in terms of real-world impact, rather than panicking,” John Wu, president of Ava Labs, the team behind the altcoin avalanche, Insider said. “The blockchain ecosystem continues to show its maturation compared to years past, when these statements had a significant impact.”