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The cryptocurrency markets have entered a challenging week, and the events that happened just a few hours ago have fueled fears. We’ve always seen how bad news can pull the market down during tough times. But what shook cryptocurrencies today? Why did Bitcoin fall to $40,222?
Why Are BTC and Cryptocurrencies Falling?
Senator Warren recently announced the final version of a bill that could mean devastation for cryptocurrencies. This bill, which expands crypto KYC obligations, now has 11 new supporters from both parties. Furthermore, Warren said that the necessary support will be provided in the Senate. After the Palestine-Israel incident in October, American crypto opponents seized a golden opportunity to wage war on crypto.
An unfounded report published by WSJ implied that tens of millions of dollars in donations were used to buy weapons against Israel. Leading on-chain intelligence companies like Elliptic denied this. So, what do we see when we look at a brief summary of these laws and other reasons for the decline? The risks specific to the law are as follows;
- If it becomes law, identity checks are requested for DeFi wallets.
- Oversight of crypto transactions over $10,000 in banks. (Extension of the process applied in movements related to offshore accounts to crypto, etc.)
- SEC and CFTC to provide guidance to their institutions on crypto crime income.
- Detailed examination of accounts associated with crypto mixers. Pressure on banks for this investigation, gaining intelligence capabilities. For example, the bank will follow whether the bank customer uses the crypto mixer and withdraws a balance to his account.
And dozens more items. The reasons for the current negative atmosphere and the summary of the causes of the decline are as follows;
- The employment data that came on Friday was very bad.
- Fed members’ 3-year interest rate expectations will be announced on Wednesday night and the expected 100bp+ interest rate cut story for next year may be disrupted.
- The Fed’s interest rate decision is coming.
- Powell could adopt a hawkish stance after the latest bad data and signal another 25bp increase.
- There is anxiety brought by the November inflation data. The October inflation was quite good last month, but there is concern that this atmosphere will be spoiled.
- BTC has risen very quickly in the still risky environment, and the concern that sell-offs could suddenly drop the price at the same speed has made investors more timid.
