Bitcoin and Ethereum prices dropped on Wednesday afternoon, exacerbating a fall that began shortly after Christmas. Bitcoin had fallen below $42,000 on Thursday night, and Ethereum had fallen below $3,300.
The falling prices followed the release on Wednesday of minutes from the Federal Reserve Board’s December meeting, which foreshadowed a gradual reduction in monetary stimulus as the economy continued to recover.
Meanwhile, Chainalysis, a blockchain data firm, produced research estimating $14 billion in stolen cryptocurrency in 2021. Kosovo outlawed cryptocurrency mining this week to save electricity, while Matt Damon sparked a firestorm of criticism after appearing in a crypto TV commercial during Sunday’s NFL games. Crypto.com and FTX, two cryptocurrency exchanges, will launch their first Super Bowl ads this year in a bid to attract a wider audience.
Here’s some more information on recent crypto news that investors should be aware of:
- According to the 2021 “Crypto Crime Report” from blockchain data firm Chainalysis, scammers seized a record $14 billion in cryptocurrency, up from $7.8 billion in 2020. While this is a significant increase in the criminal crypto activity, the research claims that broad acceptance of crypto by legitimate persons and institutions has brought the total proportion of illicit cryptocurrency trading volume to its lowest level ever.
- According to a Reuters story, Kosovo’s government banned cryptocurrency mining on Tuesday in an effort to reduce electricity use. Due to coal-fired power plant failures and high import prices, the country is currently experiencing its worst energy crisis in a decade.
- Matt Damon is causing controversy on social media again, this time for acting in a crypto-trading app commercial in which he compares buying cryptocurrency to some of history’s greatest accomplishments, such as mountaineers scaling Mt. Everest and astronauts exploring space. Damon is the latest celebrity to promote cryptocurrency, following in the footsteps of Kim Kardashian and Tom Brady.
- According to the Wall Street Journal, both Crypto.com and FTX plan to air advertisements during the Super Bowl, the country’s most viewed yearly television event. It’s just one more example of bitcoin companies seeking to cash in on growing mainstream interest.
Bitcoin is the most valuable cryptocurrency by market capitalization, and it serves as a useful barometer for the crypto market as a whole, as other coins such as Ethereum (and smaller altcoins) generally follow its lead. Despite the fact that Bitcoin recently reached a new all-time top, it was a rather typical uptick for the cryptocurrency, which is known for its volatility. That isn’t to mean that investors should ignore swings in either direction; in fact, investing professionals advise against making large investment adjustments based on regular variations.
Even though cryptocurrency is still in its infancy, anything from development to regulation can have a significant impact on investors.
Cryptocurrency is a high-risk, high-reward investment. Only invest what you’re willing to lose in cryptocurrency, and make sure you’ve taken care of your other financial goals first: put money aside for an emergency fund, invest in retirement funds, and clear off any high-interest loan balances.
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