As the crypto market leader, Bitcoin (BTC) has experienced negligible price growth over the past week, hovering around $28,820. This represents a decrease of approximately 5% from its April high of $30,979, but an increase of 77% since January. Ethereum (ETH), on the other hand, managed a 4.2% increase over the last seven days, trading at $1,885. This is a decline of 7% from its mid-April high of $2,129 and a 66% increase since January 1st, when the price was $1,197.
The market’s recent stagnation is partly due to the Federal Reserve’s decision to hike interest rates by another 25 basis points in an effort to combat inflation – the tenth consecutive hike since March last year. In broader economic terms, such interest rate hikes can deter investors from riskier assets like stocks and cryptocurrencies, as borrowing becomes more expensive and speculative investments are discouraged.
In regulatory news, the White House recently reinforced its support for a Digital Asset Mining Energy tax (DAME), which would apply to miners of both proof-of-work and proof-of-stake cryptocurrencies starting in 2024. The proposed tax, based on electricity costs, would start at 10% and increase each year until it reaches 30%. This proposal has been met with considerable resistance from the crypto industry, due to its one-size-fits-all approach that does not account for the varying energy sources used by mining companies.
Furthermore, politicians have been vocal about their opinions on cryptocurrencies, with some 2024 Presidential candidates voicing their concerns. Robert F. Kennedy Jr., a potential Democrat candidate, has mentioned a perceived “war on crypto,” linking it to the recent collapses of a few financial institutions. Ron DeSantis, Republican Florida Governor, and likely Presidential candidate, criticized Central Bank Digital Currencies (CBDCs) and their ties to Environment, Social, and Governance (ESG) policies, calling it a “huge reduction in freedom for people in this country.”
In more positive news, famed auction house Sotheby’s launched an on-chain NFT marketplace for secondary NFT sales, giving collectors a new platform to engage with artists’ work. However, recent developments in Argentina have raised concerns about a potential crypto crackdown, as the central bank banned payment platforms from offering crypto trading services to their customers.
While the market is experiencing a period of stagnation, it’s important to take a step back and consider the bigger picture. It’s evident that cryptocurrencies have gained widespread attention and are subject to increasing regulation and scrutiny. With debates surrounding growth, energy consumption, and political implications, the future of crypto remains a hot topic as we move further into the digital era.