Crypto sinks with stocks as the Fed acknowledges inflation
Bitcoin has fallen 15% over the last week as the market weighs the impact of big shifts in the crypto ecosystem and broader macro environment.
On Wednesday, Fed chairman Jerome Powell acknowledged rising inflation, and responded by bringing forward the timing of the next interest rate hike to 2023. This spooked stocks and crypto, with the S&P 500 and Bitcoin tumbling together for the remainder of the week.
Adding to the uncertainty, crypto mining firms are exiting China and billionaire investor Mark Cuban has fallen victim to a collapsing DeFi protocol. Prices across the market reflect this poor sentiment, and major altcoins including XRP and Ethereum are showing double-digit weekly losses.
This Week’s Highlights
- Panama and Paraguay look to follow El Salvador
- China steps up mining crackdown
Panama and Paraguay look to follow El Salvador
As Latin American leaders reflect on Bitcoin adoption in El Salvador, politicians in Panama and Paraguay are already proposing to make cryptocurrency legal tender in their own countries.
In Panama, opposition politician Gabriel Silva wants to make the country “a true hub of technology and entrepreneurship” by adopting Bitcoin with a bill set to be unveiled in July.
Paraguayan congressman Carlitos Rejala plans to present a similar Bitcoin bill, and local companies are already supporting the initiative: the country’s largest entertainment firm Grupo Cinco said last week it will start accepting cryptocurrencies in July.
China steps up mining crackdown
In what is being dubbed “the great mining migration”, more than half of China’s Bitcoin miners are fleeing the country as officials order mining operations to shut down.
The rise in miners leaving the country comes as recent enforcement efforts extend to Sichuan province, which is thought to be the largest mining hub in China thanks to an abundant supply of hydroelectricity.
Though the crackdown is creating uncertainty as hashrate falls, many miners are now looking to settle in Western jurisdictions. This is likely to be positive for the network in the long-term as it makes mining more decentralized—disarming critics who have pointed towards the centralization of mining in China.
The week ahead
After four weeks of sideways price action since the crash of mid-May, traders are now eagerly awaiting a breakout to indicate the direction of future momentum.
While mining uncertainty and macroeconomic woes could continue to hold prices down this week, MicroStrategy CEO Michael Saylor might be adding buying pressure. He filed to issue $1 billion worth of shares last Monday to raise funds for more Bitcoin.
On Friday, volatility could come to a head as a record number of Ethereum options contracts are set to expire.
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