WASHINGTON/MUMBAI, May 17 (Reuters)&nbsp;&#8211;&nbsp;Nofe Isah, a 25-year old based in Nigeria, has been investing in crypto since January. Last week, she lost all of her $5,000 in savings as cryptocurrency luna went into free fall.



Isah, a recently unemployed administrative officer, vowed she would never invest in crypto again.



&#8220;I can&#8217;t believe I fell for crypto,&#8221; she told Reuters by phone. &#8220;I&#8217;m just trying not to get myself depressed. Crypto has taken my money, fine. It shouldn&#8217;t take my head.”



The crypto market, known for its wild price swings, slumped last week as investors yanked money from riskier assets amid worries over soaring inflation and rising interest rates.



Bitcoin, the world&#8217;s largest cryptocurrency, fell as low as $25,401 on Thursday, its lowest since Dec. 2020. It hit a record high of $69,000 in November.



Small tokens were hit too, with ether, the second-largest token, dropping more than 15% to its lowest since June. Luna &#8211; a digital coin widely hyped on social media and backed by institutional crypto investors &#8211; shed nearly all of its value.



Small traders such as Isah have flocked to cryptocurrencies in the hope of quick returns, despite warnings from regulators that the emerging assets can be high risk.



Platforms such as Robinhood, which has 23 million customers across a variety of assets, have helped spur retail investing, including in crypto. Around a quarter of Robinhood&#8217;s transaction-based revenues came from cryptocurrencies in the first quarter of this year, Robinhood said in its latest earnings statement.



Overall user numbers at crypto platforms have ballooned. Binance, the world&#8217;s biggest crypto exchange, had some 118 million clients last month, up from 43.4 million in the first quarter of last year.



But after last week&#8217;s turmoil, online forums were awash with tales of woe, as retail investors expressed anguish about their losses.



&#8220;I&#8217;m 49, big mortgage, 3 kids etc. My retirement party is on ice for the foreseeable future!&#8221;, a user with the handle Boring-Fun-3646 said on Reddit.



Another user with the handle AdventurousAdagio830 posted on Reddit: &#8220;It doesn&#8217;t seem real that I lost $180,000.&#8221;



&#8216;DEATH SPIRAL&#8217;



Emblematic of crypto risks was the collapse last week of terraUSD, a stablecoin designed to keep a constant value via a complex algorithm that involved luna.



When the coins came under heavy selling pressure, the system broke down. TerraUSD &#8211; designed to keep a value of $1 &#8211; traded around 9 cents on Tuesday while luna plunged to near-zero, based on CoinGecko data.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL2N2X20JL&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



Tejan Shrivastava, a 31-year old graphic designer from Mumbai, who has been investing in cryptocurrencies for the last year, had his $250 investment wiped out by luna&#8217;s collapse.



&#8220;It was stuck in a death spiral. All the money was gone in 15 minutes,&#8221; he told Reuters.



&#8220;I don&#8217;t even know if I&#8217;ll invest in crypto in the future. I have a crypto portfolio, but I am planning to liquidate it once it reaches break even.&#8221;



Luna&#8217;s fall wiped out most of its market value which had been above $40 billion as recently as early April, CoinGecko data shows.



Retail investors&#8217; online frustration even spilled over into the real world.



Seoul police last week said they were seeking a suspect after an unidentified individual rang the doorbell of the apartment of Do Kwon, the founder of terraUSD, and ran away.



Police would investigate whether the suspect had invested in cryptocurrencies, a Seoul police officer told Reuters.



PATCHY REGULATION



Through its 13-year life, the crypto sector has been peppered by vertiginous climbs and sudden free falls. In November, for instance, bitcoin slumped by a fifth in just under two weeks after touching a record $69,000. Six months earlier, it had tumbled by almost 40% in just nine days.



Yet crypto&#8217;s latest crash &#8211; which pushed the sector&#8217;s combined value to $1.2 trillion, less than half of where it was last November &#8211; led to the crushing of luna, which on May 1 was the eighth-largest cryptocurrency by market capitalisation.



Cryptocurrencies are subject to patchy regulation across the world, with traders of bitcoin and the panapoly of smaller tokens typically unprotected against price slumps.



But it is difficult to gauge the scale of retail investors&#8217; pain from the crypto plunge and the repercussions on future appetite given the opaque nature of the market.



In Britain more than 4% of adults &#8211; some 2.3 million people &#8211; own cryptocurrencies, data published last year by the UK financial watchdog showed.



Britain&#8217;s watchdog said understanding of crypto was falling compared with a year earlier, &#8220;suggesting that some crypto users may not fully understand what they are buying&#8221;.



Still, some small investors are keeping the faith.



Eloisa Marchesoni, based near Tulum in Mexico and investing with a crypto syndicate, said she would not give up.



&#8220;I am looking to buy the dip &#8211; we are all waiting for bitcoin to go down to $22,000, which is not something too probable but not something that&#8217;s &#8216;not probable at all&#8217;.&#8221;



Marchesoni is also hedging her crypto bets with physical assets &#8212; &#8220;cars because you can lease them, watches, real estate&#8221;.



Bitcoin&nbsp;BTC=BTSP&nbsp;was hovering around $30,000 on Tuesday, having lost more than 20% so far this month.



Regulators remain on alert. The British government said last month it will regulate stablecoins.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL5N2W23WH&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



The U.S. Securities and Exchange Commission is toughening its stance. Gary Gensler, SEC chair, said this week investors in cryptocurrencies needed more protections.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL2N2X81YX&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



(Additional reporting by Alun John in Hong Kong and Soo-hyang Choi in Seoul; Writing by Carolyn Cohn, Elizabeth Howcroft and Tom Wilson in London. Editing by Jane Merriman)

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Small players lose faith in crypto after sell-off￼

Bitcoin dropped below the $27,000 level as a recent sell-off in the cryptocurrency space continues.



The price of&nbsp;<a href="https://www.cnbc.com/quotes/BTC.CM=">bitcoin</a>&nbsp;was last down 8.76% to $26,848.20 as of 1:47 a.m. ET Thursday, according to data from Coin Metrics.&nbsp;<a href="https://www.cnbc.com/quotes/ETH.CM=">Ether</a>&nbsp;fell more than 13% to $1,832.33.



Cryptocurrencies fell with stocks after the Bureau of Labor Statistics reported consumer prices for the month of April&nbsp;<a href="https://www.cnbc.com/2022/05/11/cpi-april-2022.html">jumped 8.3%, which was slightly higher than expected</a>&nbsp;by economists polled by Dow Jones.



That spooked investors, leading them to exit risk assets including crypto. Cryptocurrencies remain highly correlated with the S&amp;P 500 and, more recently, the Nasdaq Composite.



<h2 class="wp-block-heading" id="h-bitcoin-stays-under-30-000-wednesday">Bitcoin stays under $30,000 Wednesday</h2>



“The crypto market has been under pressure for some time now,” said Michael Rinko, venture associate at AscendEx. “The Fed keeps hiking, so equities keep going down and crypto’s been going down along with it. Generally that’s created a lot of fear in the market.”



This is the second time this week bitcoin has fallen into the $29,000 range. Analysts have called $30,000 a key level for the largest cryptocurrency by market cap, and said it could fall even further if it can’t hold there.



This time last week bitcoin&nbsp;<a href="https://www.cnbc.com/2022/05/04/bitcoin-jumps-to-40000-after-fed-chair-powell-rules-out-bigger-rate-hikes.html">touched a recent high of $40,000</a>&nbsp;but quickly reversed the next day and has been steadily hitting new lows since.



Investors also digesting big news from the Terra project, whose suddenly popular stablecoin&nbsp;<a href="https://www.cnbc.com/quotes/UST.CM=">TerraUSD</a>&nbsp;crashed&nbsp;<a href="https://www.cnbc.com/2022/05/11/terra-ust-stablecoin-dives-below-1-peg-luna-cryptocurrency-down-80percent.html">almost 100% at one point</a>&nbsp;in the past week, breaking its $1 peg. The decentralized, algorithmic stablecoin is meant to be backed by a combination of digital assets, including bitcoin.

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Bitcoin drops below $27,000 level as crypto sell-off continues

KEY POINTS



<ul class="wp-block-list"><li>UST, a so-called stablecoin that’s meant to maintain a $1 peg, was trading at less than 50 cents Wednesday.</li><li>Sister token luna dived more than 80%.</li><li>Terra creator Do Kwon said Tuesday he was “close to announcing a recovery plan” for UST.</li></ul>



The two main tokens from embattled crypto project Terra are now in free fall.



TerraUSD, or UST, is a so-called stablecoin that’s meant to maintain a 1-to-1 peg with the U.S. dollar. But the cryptocurrency plunged to as low as 31 cents Wednesday morning. It was last trading at less than 50 cents, according to CoinGecko data.



Sister token luna dived 95% to just $1.69. The latest plunge means luna has erased more than 98% of its value in the last seven days.



<a href="https://www.cnbc.com/quotes/BTC.CM=">Bitcoin</a>&nbsp;and&nbsp;<a href="https://www.cnbc.com/quotes/ETH.CM=">ether</a>&nbsp;saw more muted moves. Bitcoin fell about 1% to $31,378 while ether slipped 0.6% to $2,393.



Stablecoins are akin to bank accounts for the crypto economy, offering a sound store of value to avoid the kind of volatility cryptocurrencies like bitcoin have become notorious for — in theory, at least.



UST is what’s known as an “algorithmic” stablecoin. It uses a <a href="https://www.cnbc.com/2022/05/09/what-is-terrausd-ust-and-how-does-it-affect-bitcoin.html">complex system of minting and burning tokens</a> to adjust supply and stabilize prices. UST’s price has crumbled under the pressure of a sell-off in cryptocurrencies recently, resulting in further panic in the market.



Do Kwon, the coin’s creator, has amassed&nbsp;<a href="https://www.cnbc.com/2022/05/10/bitcoin-btc-investors-panic-as-terrausd-ust-sinks-below-1-peg.html">billions of dollars’ worth of bitcoin</a>&nbsp;through his Luna Foundation Guard fund to support UST in times of crisis. The fear now is that Luna Foundation Guard dumps those bitcoins onto the market, resulting in an even bigger sell-off.



Bitcoin&nbsp;<a href="https://www.cnbc.com/2022/05/10/bitcoin-dips-below-30000-drops-more-than-56percent-from-its-all-time-high.html">briefly slumped below $30,000</a>&nbsp;late Monday, its lowest price since July 2021. The world’s biggest digital coin is now hovering slightly above that level. It’s fallen over 50% since setting an all-time high of nearly $69,000 in November.



David Moreno Darocas, a research analyst at CryptoCompare, said the situation highlights the “fragility” of algorithmic stablecoins like UST.



“UST has grown to be both an integral and controversial piece of the crypto ecosystem,” he said.



The phenomenon is still relatively new. But UST has grown to become a major player in the crypto economy, with a circulating supply of 16 billion tokens.



Investors are now closely watching for how Luna Foundation Guard responds to prop up its ailing stablecoin. Kwon said Tuesday he was “close to announcing a recovery plan” for UST. “Hang tight,” he tweeted.



Elsewhere, crypto traders were also rattled by concerns over&nbsp;<a href="https://www.cnbc.com/quotes/COIN" target="_blank" rel="noreferrer noopener">Coinbase’s</a>&nbsp;financial health.



CEO Brian Armstrong clarified Tuesday that there was “no risk of bankruptcy” for the crypto exchange even as digital currency prices slide.



“For our retail customers, we’re taking further steps to update our user terms such that we offer the same protections to those customers in a black swan event,” he said in a series of tweets. “We should have had these in place previously, so let me apologize for that.”



Coinbase shares were down 19% in pre-market trading Wednesday after the company reported a&nbsp;<a href="https://www.cnbc.com/2022/05/10/coinbase-coin-earnings-q1-2022.html">27% slide in first-quarter revenue</a>.

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Controversial stablecoin UST — which is meant to be pegged to the dollar — plummets below 50 cents

KEY POINTS



<ul class="wp-block-list"><li>Crypto investors are keeping a close eye on UST, a controversial stablecoin, as the organization that supports it is sitting on billions of dollars in bitcoin.</li><li>Terra’s UST token sank below 70 cents late Monday, as holders continued to flee the controversial stablecoin.</li><li>Traders worry the project might have sold, or will sell, a large portion of its bitcoin to prop up UST.</li></ul>



Investors in&nbsp;<a href="https://www.cnbc.com/quotes/BTC.CM=">bitcoin</a>&nbsp;are in panic mode as the controversial terraUSD stablecoin slips further from its intended $1 peg.



TerraUSD, or UST, sank below 70 cents for the first time late Monday, as holders continued to flee the token in what some have described as a “bank run.” The token fell as low as 62 cents before regaining ground to trade at 90 cents Tuesday, according to Coinbase data.



Created by Singapore-based Terraform Labs in 2018, UST is what’s known as an “algorithmic” stablecoin. Part of the Terra blockchain project, it’s meant to track the value of the dollar, like fellow stablecoins tether and USDC.



However, unlike with those cryptocurrencies, Terra doesn’t have cash and other assets held in a reserve to back its token. Instead, it uses a complex mix of code — alongside a sister token called luna — to stabilize prices.



UST is important for bitcoin investors as Luna Foundation Guard, an organization supporting the Terra project, is sitting on billions of dollars in bitcoin that could potentially be dumped onto the market at any point.



″Every professional investor in crypto has one eye on UST today, watching to see if it can maintain its peg to the dollar,” said Matt Hougan, chief investment officer at Bitwise Asset Management. “There’s clearly significant risk in the market.”



In simple terms, the Terra protocol&nbsp;<a href="https://www.cnbc.com/2022/05/09/what-is-terrausd-ust-and-how-does-it-affect-bitcoin.html">destroys and creates new units of UST and luna</a>&nbsp;to adjust&nbsp;supply.&nbsp;When the price of UST falls&nbsp;below the dollar,&nbsp;it can be&nbsp;taken out of circulation and exchanged for luna, making&nbsp;UST’s supply more scarce and boosting its price&nbsp;— at least, that’s how it should work in theory.



To further complicate things, Terra’s creator, Do Kwon, bought $3.5 billion worth of bitcoin to provide a backstop for UST in times of crisis. The theory was that UST could eventually be redeemed for bitcoin instead of luna, but this is untested and hasn’t yet been put into practice.



Deposits into Anchor, Terra’s flagship lending protocol, have declined from 10.3 billion tokens on May 6 to just 6.4 billion Tuesday, according to data from blockchain analytics platform Nansen. Anchor offered users an almost 20% annual percentage yield on their UST holdings, a rate many analysts believe was unsustainable.



On Monday, Kwon’s Luna Foundation Guard said it would lend $750&nbsp;million worth of bitcoin to trading firms to “help protect the UST peg,” while a further 750 million UST will be lent out to buy more bitcoin “as market conditions normalize.”



In a follow-up tweet, the organization said it had withdrawn 37,000 bitcoins — worth more than $1 billion at current prices — to lend out. “Very little” of the borrowed bitcoins have been spent, Luna Foundation Guard said, but it is “currently being used to buy” UST.



Several crypto investors are worried that Luna Foundation Guard might have sold, or will sell, a large portion of its bitcoin to prop up UST — analysts pointed out that the group’s bitcoin wallet is now <a href="https://www.oklink.com/en/btc/address/bc1q9d4ywgfnd8h43da5tpcxcn6ajv590cg6d3tg6axemvljvt2k76zs50tv4q" target="_blank" rel="noreferrer noopener">completely empty</a>.



Amid all of this uncertainty, UST’s decline has sent shock waves throughout the crypto market.



Bitcoin, the world’s largest digital currency,&nbsp;<a href="https://www.cnbc.com/2022/05/10/bitcoin-dips-below-30000-drops-more-than-56percent-from-its-all-time-high.html">briefly fell below $30,000</a>, hitting its lowest price since July 2021. As of 7:00 a.m. ET, bitcoin was trading at $31,324, down around 5% in the last 24 hours. It’s now down more than 50% from its November all-time high.



Luna, UST’s counterpart, has roughly halved in value in the past 24 hours. It was last trading at a price of $32.



Adding to UST holders’ woes, Binance, the largest crypto exchange by market volume,&nbsp;<a href="https://www.binance.com/en/support/announcement/dc02bedd65be40f7b10022f26bc06879" target="_blank" rel="noreferrer noopener">temporarily suspended</a>&nbsp;withdrawals of both UST and luna “due to a high volume of pending withdrawal transactions,” citing network congestion.



Binance has since resumed withdrawals, and says it “will continue to monitor” network conditions.



“I think the market is expecting some forced selling here on the part of Terra and the reserve,” Nic Carter, co-founder of Coin Metrics, told CNBC. “It is a calamity but very expected. No algorithmic stablecoin has ever succeeded and this is no exception.”



He added that the problem with UST is that it’s largely “backed by faith.”



“It’s not fully guaranteed, it’s certainly not fully backed by reserves,” he told CNBC. “It was really just backed by faith in the issuer effectively.”



Terraform Labs did not respond to multiple requests for comment.

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Bitcoin investors are panicking as a controversial crypto experiment unravels

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="728" height="464" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/04/S5ZSZFJYLBIXNPDNSK3FB3QCRA.jpg" alt="" class="wp-image-416757" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/04/S5ZSZFJYLBIXNPDNSK3FB3QCRA.jpg 728w, https://cms.cnbcafrica.com/wp-content/uploads/2022/04/S5ZSZFJYLBIXNPDNSK3FB3QCRA-300x191.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/04/S5ZSZFJYLBIXNPDNSK3FB3QCRA-141x90.jpg 141w" sizes="auto, (max-width: 728px) 100vw, 728px" /><figcaption>Representations of virtual currency Bitcoin are seen in this picture illustration taken taken March 13, 2020. REUTERS/Dado Ruvic/File Photo</figcaption></figure>



BANGUI, April 27 (Reuters)&nbsp;&#8211;&nbsp;Central African Republic has adopted bitcoin as an official currency, the presidency said on Wednesday, becoming the first country in Africa and only the second in the world to do so.



Despite rich reserves of gold and diamonds, Central African Republic is one of the world&#8217;s poorest and least-developed countries and has been gripped by rebel violence for years.



A bill governing the use of cryptocurrency was adopted unanimously by parliament last week, said a statement signed by Obed Namsio, chief of staff of President Faustin-Archange Touadera.



&#8220;The president supports this bill because it will improve the conditions of Central African citizens,&#8221; Namsio told Reuters, without elaborating.



In the statement, he called it &#8220;a decisive step toward opening up new opportunities for our country&#8221;.



Central African Republic is one of six nations that use the Central African CFA franc, a regional currency governed by the Bank of Central African States (BEAC).



<h3 class="wp-block-heading" id="h-read-more-bitcoin-spikes-8-after-apparent-release-of-yellen-statement-on-biden-s-crypto-executive-order">Read more: <a href="https://www.cnbcafrica.com/2022/bitcoin-spikes-8-after-apparent-release-of-yellen-statement-on-bidens-crypto-executive-order/">Bitcoin spikes 8% after apparent release of Yellen statement on Biden’s crypto executive order</a></h3>



Two of the country&#8217;s former prime ministers last week signed a letter expressing concern about the adoption of bitcoin without guidance from the BEAC, calling it a &#8220;serious offence&#8221;.



&#8220;The BEAC learned at the same time as the public of the enactment of a new law on cryptocurrency in Central African Republic,&#8221; a BEAC spokesman told Reuters, adding that the bank did not have an official response yet.



El Salvador became the first country in the world to adopt bitcoin as legal tender last year, but the rollout was hampered by scepticism and it postponed a proposed bitcoin bond in March amid global market turmoil.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL6N2VP07Q&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



African governments have taken a varied approach to regulating cryptocurrencies and blockchain technology.



Nigeria&#8217;s central bank barred local banks from working with cryptocurrencies last year before launching its own digital currency, the eNaira.



South African regulators have been exploring the potential regulation of cryptocurrencies and other blockchain technology, and Tanzania&#8217;s central bank said last year it was working on a presidential directive to prepare for cryptocurrencies.&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL5N2O7264&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">Read full story</a>



(Reporting by Judicael Yongo; Additional reporting by Bate Felix; Writing by Nellie Peyton; Editing by Elaine Hardcastle)

S5ZSZFJYLBIXNPDNSK3FB3QCRA

Central African Republic adopts bitcoin as an official currency

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="740" height="416" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/02/104893268-GettyImages-818871806.jpg" alt="" class="wp-image-415449" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/02/104893268-GettyImages-818871806.jpg 740w, https://cms.cnbcafrica.com/wp-content/uploads/2022/02/104893268-GettyImages-818871806-300x169.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/02/104893268-GettyImages-818871806-160x90.jpg 160w" sizes="auto, (max-width: 740px) 100vw, 740px" /><figcaption>Bitcoin on a mound of gold.
bodnarchuk | iStock Editorial | Getty Images</figcaption></figure>



The price of bitcoin stumbled on Monday as investors assessed the risks from rising rates and the potential for more tightening by the Federal Reserve.



Bitcoin last fell 7% to $40,009.78, according to Coin Metrics. Earlier in the day it fell to $39,785.68, falling below the key $40,000 support level for the first time since Mar. 16.



The decline came after the 10-year Treasury yield hit a three-year high of 2.78% Monday. Riskier assets tend to fall when yields rise. On Monday the tech-heavy Nasdaq Composite was down by more than 1%. Though bitcoin should trade independently of the stock market, a correlation between the two has been particularly high in recent months.



<h3 class="wp-block-heading" id="h-read-more-bitcoin-spikes-8-after-apparent-release-of-yellen-statement-on-biden-s-crypto-executive-order">Read more: <a href="https://www.cnbcafrica.com/2022/bitcoin-spikes-8-after-apparent-release-of-yellen-statement-on-bidens-crypto-executive-order/">Bitcoin spikes 8% after apparent release of Yellen statement on Biden’s crypto executive order</a></h3>



“Bitcoin and traditional markets have continued to respond negatively to expectations that the U.S. Fed will tighten its monetary policy to fight inflation, and Tuesday’s CPI release seems to be weighing heavily,” said Riyad Carey, a research analyst at Kaiko. “Globally, the continuing war in Ukraine and increasing shutdowns in China are dragging on markets.”



Carey also noted the market reaction to Terraform Labs buying bitcoin in troves for its stablecoin reserves – it holds about 40,000 bitcoin after buying $175 million worth over the weekend – has “largely played out.” Two weeks ago bitcoin climbed over the $48,000 level, turning positive for the year, as the group behind the Terra stablecoin stepped up its bitcoin buying.



Tokens across the crypto market were lower as well. Ether declined by about 9% along with other platform networks, according to Coin Metrics. Algorand’s ALGO lost more than 9%. Solana’s SOL and Cardano’s ADA were each down by 11%.

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Bitcoin falls below $40,000 for the first time in almost a month as investors assess global macro risks

At a bitcoin conference on Thursday, billionaire venture capitalist Peter Thiel said Warren Buffett tops an “enemies list” of people who are trying to stop the cryptocurrency.



“Enemy number one,” Thiel said to a booing Miami crowd, is “the sociopathic grandpa from Omaha.” Buffett’s Berkshire Hathaway is based in Omaha, Neb.



Thiel, who by 2018 had reportedly amassed hundreds of millions of dollars worth of bitcoin through venture firm Founders Fund, also called out JPMorgan CEO Jamie Dimon and BlackRock CEO Larry Fink. Thiel presented large graphics with images of the two financial executives and their bearish comments about bitcoin.



The images all contained the word “gerontocracy.” About Dimon, Thiel said his views are part of “the New York City banker bias.” 



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="720" height="405" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/04/104352405-GettyImages-464620582.jpg" alt="" class="wp-image-416367" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/04/104352405-GettyImages-464620582.jpg 720w, https://cms.cnbcafrica.com/wp-content/uploads/2022/04/104352405-GettyImages-464620582-300x169.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/04/104352405-GettyImages-464620582-160x90.jpg 160w" sizes="auto, (max-width: 720px) 100vw, 720px" /><figcaption>Peter Thiel VCG/VCG | Getty Images</figcaption></figure>



Thiel held up a headshot of Buffett with the words “rat poison” on it, referring to the time the Berkshire CEO dismissed bitcoin using that phrase. Another quote from Buffett read, “I don’t own any and I never will.” Earlier this year, Berkshire invested $1 billion in Brazil’s Nubank, an online bank that’s popular among crypto investors.



The Miami tirade is Thiel’s latest and boldest public attack on the people he sees as standing in the way of bitcoin’s progress.



“This is what we have to fight for bitcoin to go 10x or 100x from here,” Thiel said.



underpinning the cryptocurrency, but feel the need to take down bitcoin and its legitimacy.



<h3 class="wp-block-heading" id="h-read-more-cryptocurrencies-tumble-with-bitcoin-falling-8-and-ether-down-9-in-the-last-24-hours">Read more: <a href="https://www.cnbcafrica.com/2022/cryptocurrencies-tumble-with-bitcoin-falling-8-and-ether-down-9-in-the-last-24-hours/">Cryptocurrencies tumble, with bitcoin falling 8% and ether down 9% in the last 24 hours</a></h3>



“When they choose not to allocate to bitcoin, that’s a deeply political choice,” said Thiel, a prominent backer of Republican politicians, most notably former President Donald Trump. Buffett, Thiel said, invests in a “list of woke companies.”



At one point, Thiel presented a colorful photo of Miami next to the word “youth.”



“We need to say, you know, you have to get on board with this,” he said.



A representative from Berkshire Hathaway didn’t immediately respond to a request for comment, and a JPMorgan spokesperson declined to comment for this story.



A BlackRock spokesperson pointed CNBC to comments Fink made in his letter to shareholders last month. He wrote that Russia’s invasion of Ukraine could accelerate adoption of digital currencies, and said “a global digital payment system, thoughtfully designed, can enhance the settlement of international transactions while reducing the risk of money laundering and corruption.”

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Peter Thiel calls Warren Buffett a ‘sociopathic grandpa from Omaha’ and bitcoin’s ‘enemy number one’

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="740" height="416" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/03/106963876-1634825244800-gettyimages-1236011917-AA_21102021_496570.jpeg" alt="" class="wp-image-415765" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/03/106963876-1634825244800-gettyimages-1236011917-AA_21102021_496570.jpeg 740w, https://cms.cnbcafrica.com/wp-content/uploads/2022/03/106963876-1634825244800-gettyimages-1236011917-AA_21102021_496570-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/03/106963876-1634825244800-gettyimages-1236011917-AA_21102021_496570-160x90.jpeg 160w" sizes="auto, (max-width: 740px) 100vw, 740px" /><figcaption>Selim Korkutata | Anadolu Agency | Getty Images</figcaption></figure>



<a href="https://www.cnbcafrica.com/quotes/btc=x/">Bitcoin</a> and other cryptocurrencies spiked after the U.S. Treasury apparently released details of an executive order from President Joe Biden that appeared to take a supportive stance toward digital assets.



Bitcoin was trading at $41,584.21, nearly 9% higher as of 2:17 a.m. ET, according to data from CoinDesk. Other cryptocurrencies including <a href="https://www.cnbcafrica.com/quotes/eth=x/">ether</a> were also sharply higher.



The rally began just after 6 p.m. ET Tuesday after the Treasury published details and a statement online in response to an upcoming executive order from the U.S. president on cryptocurrencies. The statement from Treasury Secretary Janet Yellen was unpublished shortly after.



Reuters and other news outlets reported earlier this week that a Biden order on cryptocurrencies is imminent.



The now-removed Treasury statement said the executive order calls for a comprehensive approach to digital asset policy and that government agencies would coordinate their work.



<h3 class="wp-block-heading" id="h-read-more-bitcoin-jumps-13-as-russia-ukraine-conflict-continues-and-u-s-imposes-further-sanctions">Read more: <a href="https://www.cnbcafrica.com/2022/bitcoin-jumps-13-as-russia-ukraine-conflict-continues-and-u-s-imposes-further-sanctions/">Bitcoin jumps 13% as Russia-Ukraine conflict continues and U.S. imposes further sanctions</a></h3>



Traders are still awaiting the final executive order, but the fleeting Treasury statement, which appeared supportive of cryptocurrencies, was enough to boost optimism.



“The leaked Treasury statement has been welcomed by the crypto market as it seems to focus on development of the industry, rather than on imposing unrealistic regulations,” Yuya Hasegawa, market analyst at Japanese cryptocurrency exchange Bitbank, told CNBC.



Cameron Winklevoss, co-founder of cryptocurrency exchange Gemini, called the executive order a “constructive approach to thoughtful crypto regulation.”



While countries like China have looked to wipe out cryptocurrency trading, others such as El Salvador have embraced it. But the U.S. currently does not have a high-level framework for developing and regulating cryptocurrencies, sparking fears that it could be left behind.



Last year, cryptocurrency exchange Coinbase said the U.S. should create a new regulator to oversee the digital asset market.

106963876-1634825244800-gettyimages-1236011917-AA_21102021_496570

Bitcoin spikes 8% after apparent release of Yellen statement on Biden’s crypto executive order

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="740" height="416" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/02/104893268-GettyImages-818871806.jpg" alt="" class="wp-image-415449" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/02/104893268-GettyImages-818871806.jpg 740w, https://cms.cnbcafrica.com/wp-content/uploads/2022/02/104893268-GettyImages-818871806-300x169.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/02/104893268-GettyImages-818871806-160x90.jpg 160w" sizes="auto, (max-width: 740px) 100vw, 740px" /><figcaption>Bitcoin on a mound of gold.
bodnarchuk | iStock Editorial | Getty Images</figcaption></figure>



The role of cryptocurrencies like <a href="https://www.cnbcafrica.com/quotes/btc=x/">bitcoin</a> has been a key talking point during&nbsp;Russia’s invasion of Ukraine&nbsp;and the enacting of sanctions and subsequent financial market turmoil.



And it has thrown up three big questions about how it is being used and what its future looks like.



<h2 class="wp-block-heading" id="h-can-cryptos-be-used-to-avoid-sanctions"><a></a>Can cryptos be used to avoid sanctions?</h2>



After its invasion of Ukraine, Russia has been hit with a number of economic sanctions aimed at cutting the country off from the global financial system.



Key Russian figures and financial institutions have been placed on a&nbsp;U.S. sanctions list&nbsp;that effectively prohibits American firms from doing business with them. Meanwhile, the United States, European allies and Canada have removed key Russian banks from an&nbsp;interbank messaging system called SWIFT, which hampers their access to global financial markets.



The sanctions have&nbsp;caused the Russian ruble to plunge.



This has led to a debate about whether cryptocurrencies, especially bitcoin, could be a way for those on sanctions lists to evade the restrictions.



This is because bitcoin and other digital currencies are often decentralized, meaning they’re not issued or controlled by a central entity like a central bank. When crypto is sent to other users, it does not go through the traditional route of financial plumbing.



But there are a number of challenges.



First, blockchain, the technology that underpins bitcoin, is a public ledger of activity. It’s therefore possible to track the movements of funds from one account to another quite easily. This doesn’t make it a good tool for avoiding sanctions.



“The biggest misconception about crypto remains that it is untraceable and is primarily used for nefarious purposes, which couldn’t be further from the truth,” Vijay Ayyar, vice president of corporate development and international at crypto exchange Luno, told CNBC.



<h3 class="wp-block-heading">Read more: <a href="https://www.cnbcafrica.com/2022/bitcoin-sanctions-could-be-next-but-most-russians-wont-care/">Bitcoin sanctions could be next, but most Russians won’t care</a></h3>



Meanwhile, there isn’t enough liquidity for Russian oligarchs and companies to move their money around.



“Liquidity in crypto is still a fraction of the global currency market, and hence moving large amounts of money using crypto is difficult,” Ayyar said.



Cryptocurrency exchanges will also be on high alert.



“Exchanges that operate with strong processes and codes of conduct will no doubt be doubly watchful at this moment for funds that have nefarious origins,” Charles Hayter, CEO of data firm CryptoCompare, told&nbsp;CNBC.



On Thursday, Brian Armstrong, CEO of cryptocurrency exchange and wallet Coinbase, backed up many of these points in a thread. He said that every U.S. business has to follow the law.



“It doesn’t matter if your company handles dollars, crypto, gold, real estate or even non financial assets. Sanctions laws apply to all US people and businesses,” Armstrong said.



“So it would be a mistake to think crypto businesses like Coinbase won’t follow the law. Of course we will. This is why we screen people who sign up for our services against global watchlists, and block transactions from IP addresses that might belong to sanctioned individuals or entities, just like any other regulated financial services business.”



However, there has been a spike in the volume of transactions from ruble into bitcoin and to tether, a so-called stablecoin tied to the U.S. dollar, since Russia’s attack on Ukraine, according to CryptoCompare. Hayter said this is a “flight to the dollar by any means possible where crypto is but another route to preserve wealth,” as the ruble has plunged.



Coinbase’s Armstrong said “some ordinary Russians are using crypto as a lifeline now that their currency has collapsed.”



Earlier this week, lawmakers including Senator Elizabeth Warren urged the Treasury Department to ensure that they could make sure crypto companies are compliant with sanctions on Russia. One U.S. government official said it’s unlikely that Russia could evade sanctions using cryptocurrencies.



“The scale that the Russian state would need to successfully circumvent all U.S. and partners’ financial sanctions would almost certainly render cryptocurrency as an ineffective primary tool for the state,” said Carol House, the director of cybersecurity for the National Security Council, during a webinar on Wednesday,&nbsp;Reuters reported.



<h2 class="wp-block-heading"><a></a>Is bitcoin finally becoming ‘digital gold’?</h2>



For years, proponents of bitcoin have been calling the digital currency “digital gold.” The idea is that bitcoin is a store of value and could be a safe haven asset in times of turmoil, just like the yellow metal.



However, that theory has unraveled in recent years, as&nbsp;bitcoin trading has been correlated to risk assets, in particular stocks.



But as the war in Ukraine intensified this week, bitcoin saw a huge one day jump taking it above $44,000 off the lows for the year, prompting speculation that its&nbsp;time as a safe haven asset has come.



Several experts disagreed.



<h3 class="wp-block-heading">Read more: <a href="https://www.cnbcafrica.com/2022/cryptocurrencies-tumble-with-bitcoin-falling-15-and-ether-down-20/">Cryptocurrencies tumble, with bitcoin falling 15% and ether down 20%</a></h3>



“We have read across a few different publications that BTC is regaining its status as a safe-haven. We completely disagree with this notion,” Lux Thiagarajah, head of trading and account management at crypto financial services company BCB Group, said in a note on Thursday.



“A safe haven is an asset that retains its value during times of market turbulence. Crypto has aggressively sold off since it was clear the Fed (U.S. Federal Reserve) were going to hike rates faster than anticipated which in turn saw stocks sell off. This is not the definition of a safe haven.”



Luno’s Ayyar said in the past week that bitcoin has “de-correlated quite a bit from equities and gold, which is one positive indication around its use case as a safe haven.” He added that bitcoin will continue to mature, taking away market share from gold, but that narrative “may still take more time to play out.”



<h2 class="wp-block-heading"><a></a>Has blockchain tech proven its utility?</h2>



Cryptocurrency proponents often tout the&nbsp;underlying blockchain&nbsp;as a way to have more efficient and traceable transactions. One of the reasons is that there is no intermediary to move the money, unlike traditional financial transactions.



But many cryptocurrencies still suffer from high fees and slow transaction speed. They haven’t necessarily seen mass adoption for things like payments.



However, during the war,&nbsp;Ukraine began to accept donations via cryptocurrencies&nbsp;to fund its military, among other things. Ukraine has raised over $50 million via cryptocurrencies, according to analytics firm Elliptic.



Taking donations via traditional banking methods could be difficult, given the high cost of sending money abroad. It might also take a long time for Ukraine to receive money.



That’s where cryptocurrencies have an advantage, according to Garrick Hileman, visiting fellow at the London School of Economics.



“When critical infrastructure is out or there are concerns about how quickly something can get through traditional banking system, as long as you have internet and a computing device you can transact. That has been one of the promises of crypto,” Hileman said.



Because the transactions are on a public ledger, Hileman said, you can to some extent to see where the money you send goes and how it is deployed after it is received.



“Some of the original value propositions of cryptocurrencies are seeing validation,” he added.

The Russia-Ukraine conflict has thrust crypto into the spotlight and raised 3 big questions

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="740" height="416" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/03/107022966-1646167695171-107022966-16461545292022-03-01t170756z_744715044_rc2ots9calux_rtrmadp_0_ukraine-crisis-east.jpg" alt="" class="wp-image-415590" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/03/107022966-1646167695171-107022966-16461545292022-03-01t170756z_744715044_rc2ots9calux_rtrmadp_0_ukraine-crisis-east.jpg 740w, https://cms.cnbcafrica.com/wp-content/uploads/2022/03/107022966-1646167695171-107022966-16461545292022-03-01t170756z_744715044_rc2ots9calux_rtrmadp_0_ukraine-crisis-east-300x169.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/03/107022966-1646167695171-107022966-16461545292022-03-01t170756z_744715044_rc2ots9calux_rtrmadp_0_ukraine-crisis-east-160x90.jpg 160w" sizes="auto, (max-width: 740px) 100vw, 740px" /><figcaption>Pro-Russian separatists are seen next to an abandoned tank on a road between the separatist-controlled settlements of Mykolaivka (Nikolaevka) and Buhas (Bugas), as Russia’s invasion of Ukraine continues, in the Donetsk region, Ukraine March 1, 2022. Alexander Ermochenko | Reuters</figcaption></figure>



As Moscow’s war on Ukraine rages on and the Russian economy and currency&nbsp;spiral to new lows, Washington is&nbsp;reportedly trying out a new way&nbsp;to dial up the pressure on Putin:&nbsp;sanctions targeting&nbsp;cryptocurrencies like&nbsp;<a href="https://www.cnbcafrica.com/quotes/btc=x/">bitcoin</a>&nbsp;and&nbsp;<a href="https://www.cnbcafrica.com/quotes/eth=x/">ethereum</a>.



The Department of Justice announced early Wednesday a&nbsp;new task force&nbsp;broadly designed to enforce sanctions. As part of that, it will target efforts to use cryptocurrency to evade U.S. sanctions, launder proceeds of foreign corruption or evade U.S. responses to Russian military aggression.



Taking aim at Russia’s access to digital cash&nbsp;comes as the U.S. and its allies, including notoriously neutral Switzerland,&nbsp;levy heavy punitive measures&nbsp;against Moscow.



The concern is that the Kremlin, as well as other ancillary actors supporting the offensive on Ukraine, will evade the sanctions regime via digital tokens, which are not owned or issued by a central authority like a bank. Bitcoin, like most cryptocurrencies, is decentralized and borderless, which means that it doesn’t respect national boundaries. Because there is no central authority to block transactions, digital currencies are also resistant.



Since Russia invaded Ukraine on Feb. 24,&nbsp;stats from crypto data provider Kaiko&nbsp;show that transactions on centralized bitcoin exchanges in both the Russian ruble and the Ukrainian hryvnia have surged to their highest levels in months. This is likely part of the reason why Ukraine asked all the top crypto exchanges to ban Russian users — a request that has been&nbsp;rejected by many major players, who argue a move like that would go against the very reason why cryptocurrencies exist.



Despite growing signs of crypto adoption — as well as dialed-up rhetoric from world leaders about banning sanctioned Russians from digital currency exchanges — crypto as a pathway to sidestepping sanctions isn’t really a viable option at scale.



First of all, crypto markets offer thin liquidity and token transactions are, by design, traceable via a public ledger known as the blockchain. Aside from that, experts tell CNBC that ultimately there are better and smarter ways than using bitcoin to get around global financial blockades.



“The size and scale of crypto markets — and their state of liquidity — is not sufficient enough to offset what happens from banking disruptions and other disruptions from sanctions,” said Yaya Fanusie, a fellow at the Center for a New American Security who assesses national security and money laundering risks related to digital assets.



“It’s akin to, if someone were to block your paycheck for a month and then you had to rely on your piggy bank to make up for it,” he said.



<h2 class="wp-block-heading" id="h-russia-is-no-stranger-to-sanctions"><a></a>Russia is no stranger to sanctions</h2>



Russia is no stranger to sanctions, and its political class has spent years getting creative on workarounds.



Moscow faced international condemnation in 2014 after Russia annexed the Crimean peninsula in Ukraine. That was also the year that a passenger plane headed from the Netherlands to Malaysia was&nbsp;shot down by a Russian-made&nbsp;surface-to-air missile&nbsp;fired over territory held by&nbsp;pro-Russian separatists in eastern Ukraine.



Since then, President Vladimir Putin has built buffers to insulate Russia from the blowback of Western sanctions, which economists estimate has&nbsp;cost Russia $50 billion a year.



Typically, the way sanctions work is that a government generates a list of the individuals and companies that must be avoided, and those doing business with these banned entities are subject to heavy fines. But sanctions are only as good as the KYC (Know Your Customer) onboarding requirements, explained Sarah Beth Felix, an authority on anti-money laundering and sanctions compliance.



“Depending on how strict that is, then that drives the data, which drives whether or not the sanctions are actually effective,” Felix says. “That is agnostic when it comes to the underlying flow of funds, whether it be crypto, fiat, wires, payable-through accounts — it all lives or dies on the underlying data that’s captured and verified on the ownership of the company, the individual, and all that kind of stuff.”



Part of Putin’s strategy involved diversifying away from U.S. treasuries and the U.S. dollar, cultivating a new kind of debt structure largely based on euros and gold. Putin’s war chest includes $630 billion in foreign reserves, which serves as a sort of financial shield meant to dull the impact of sweeping sanctions.



The country’s underlying financial fundamentals have also helped to absorb the shock. CNBC has reported that Russia has a debt-to-GDP ratio of only 18%, a current account surplus, and the price of oil surging past $113 a barrel (its highest level in more than a decade) is certainly a boon. Thus far, the White House has&nbsp;steered clear of sanctioning&nbsp;Russian oil sales.



<h3 class="wp-block-heading">Read more: <a href="https://www.cnbcafrica.com/2022/russia-central-bank-more-than-doubles-interest-rate-to-20-to-boost-sinking-ruble/">Russia central bank more than doubles interest rate to 20% to boost sinking ruble</a></h3>



Moreover, experts tell CNBC that Russians have been bracing for this kind of crackdown for months.



“Russia’s elite and financial authorities have been preparing for sanctions for some time,” said Salman Banaei, head of public policy for North American for Chainalysis, which&nbsp;specializes in tracking activity on blockchain networks.



Any movement of funds likely happened prior to Russia’s invasion, Felix agreed.



“I would assume billions and billions of dollars already moved through these front companies and shell corporations that we have around the world that are owned by Russian businesses and individuals, regardless of whether it involved crypto or normal bank-to-bank wires,” said Felix.



Banaei agrees that it is unlikely that designated persons would opt to move around large quantities of crypto at this point. Instead, Banaei says that if cryptocurrency is being used to evade sanctions, it likely would have happened slowly, over the past several months.&nbsp;



“At the end of all of this, the glaring, massive gap that we have is in the transparency of who owns what companies, not just in the U.S., but around the world,” explained Felix.



<h2 class="wp-block-heading"><a></a>Bitcoin wouldn’t work anyway</h2>



Even if Russia wanted to use crypto to evade sanctions, its economy is too big, the crypto market is too small, and any huge transactions would likely be flagged.



“The size of crypto markets is small compared to what’s happening in the banking sector,” said Fanusie.



The U.S. has placed new debt and equity restrictions on some of Russia’s most critical state-owned enterprises with&nbsp;estimated assets of nearly $1.4 trillion. These entities won’t be able to raise money through the U.S. market, a critical source of capital. The&nbsp;total cryptocurrency market cap is&nbsp;at around $1.9 trillion.



Cryptocurrencies are also thinly traded, which means that it can prove difficult to buy large swaths of digital tokens like bitcoin. The bitcoin-ruble pair&nbsp;maxes out at about $250,000 per trade&nbsp;on Binance,&nbsp;the world’s biggest cryptocurrency exchange,&nbsp;versus the bitcoin and U.S. dollar pairing, which has a maximum market order&nbsp;of around $2.6 million.



Delston tells CNBC that the size of the transactions that the Russian government would need to conduct would be multiples of what individual Russian citizens might be doing right now. Not only would that prove difficult to do in terms of liquidity limitations, but it could also red flag the transaction entirely.



“On the blockchain, the size of the transaction is immediately available, and very sizable transactions would be very apparent to anyone looking,” Delston said, who added that cryptocurrencies aren’t the bastion of anonymity they are so often made out to be.



While crypto has the advantage of not involving wire transfers from bank to bank (which are heavily policed to ensure sanctions compliance), every transfer ever made is captured on a public, permanent, and immutable blockchain ledger and can be traced in nanoseconds.



<h3 class="wp-block-heading">Read more: <a href="https://www.cnbcafrica.com/2022/bitcoin-jumps-13-as-russia-ukraine-conflict-continues-and-u-s-imposes-further-sanctions/">Bitcoin jumps 13% as Russia-Ukraine conflict continues and U.S. imposes further sanctions</a></h3>



“If I hand you find a $5 bill, you can never trace that back to me, where if I were to transfer you money through my wallet, that’s always linked back to my wallet ID, which if I went through a regulated exchange, has all of my CIP (Customer Identification Program) information,” explained Felix.



Chainalysis’ Banaei tells CNBC that a single tip in the cryptocurrency market can, within hours, uncover a network of wallet addresses involved in ransomware fraud and money laundering, while a similar tip relating to a traditional bank wire could take several months to reach a similar level of visibility into a criminal network and its money laundering.&nbsp;&nbsp;



While there are&nbsp;privacy tokens like&nbsp;monero, dash, and zcash, which have additional anonymity built into them, they tend not to be as liquid as other tokens, since many regulated exchanges have chosen not to list them due to regulatory concerns.



There is also the question of what to do once you have the crypto in hand.



“It’s hard to buy stuff with cryptocurrency, especially big stuff,” Delston tells CNBC. He says that he doesn’t know of any major electronics companies, food exporters, or spare parts manufacturers that accept cryptocurrency as payment, which he notes are “all the kinds of things that a country like Russia would need, because it doesn’t produce it on its own.”



And while historically crypto exchange compliance with the global sanctions regime hasn’t been great, Fanusie says it’s actually getting much better, as these platforms beef up their internal compliance teams.



Federal prosecutors are adding muscle to their crypto policing duties, as well. In February, the U.S.&nbsp;Justice Department unveiled&nbsp;a new cryptocurrency enforcement team.



<h2 class="wp-block-heading"><a></a>What about a digital ruble?</h2>



While a lot of attention goes to the potential for bitcoin to facilitate sanctions evasion, the bigger story to Fanusie is what sanctioned actors are doing with central bank digital currencies, or CBDCs.



The Bank of Russia released&nbsp;a consultation paper for a “digital ruble”&nbsp;in October 2020, and Central Bank Governor Elvira Nabiullina said the country&nbsp;plans to prototype and pilot it&nbsp;this year.



The digital ruble would be a virtual version of the country’s national currency that —&nbsp;similar to China’s digital yuan&nbsp;— would be&nbsp;controlled centrally by the Bank of Russia&nbsp;and use some form of distributed ledger technology.



At the time it was first announced,&nbsp;a Moscow newspaper, citing officials, said a digital ruble would both reduce dependency on the dollar, as well as mitigate exposure to sanctions.



Well before the Russian invasion of Ukraine, former U.S. Treasury official Michael Greenwald&nbsp;told CNBC&nbsp;that a digital ruble could prove problematic for the U.S.



“What alarms me is if Russia, China, and Iran each creates central bank digital currencies to operate outside of the dollar and other countries followed them,” he said. “That would be alarming.”

107022966-1646167695171-107022966-16461545292022-03-01t170756z_744715044_rc2ots9calux_rtrmadp_0_ukraine-crisis-east

Bitcoin sanctions could be next, but most Russians won’t care

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="740" height="416" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/03/106928219-1629130755312-gettyimages-1234311531-sindeyev-notitle210729_np12K-1.jpeg" alt="" class="wp-image-415567" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/03/106928219-1629130755312-gettyimages-1234311531-sindeyev-notitle210729_np12K-1.jpeg 740w, https://cms.cnbcafrica.com/wp-content/uploads/2022/03/106928219-1629130755312-gettyimages-1234311531-sindeyev-notitle210729_np12K-1-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/03/106928219-1629130755312-gettyimages-1234311531-sindeyev-notitle210729_np12K-1-160x90.jpeg 160w" sizes="auto, (max-width: 740px) 100vw, 740px" /><figcaption>A visual representation of bitcoin. STR | NurPhoto via Getty Images</figcaption></figure>



Bitcoin jumped 13% on Tuesday continuing its sharp rebound as the Russian assault on Ukraine continues and the U.S. ratchets up sanctions.



The cryptocurrency was up more than 13% at $43,500.16 as of 3:03 a.m. ET after hitting a high in the past 24 hours of $44,165.90, according to CoinDesk data. That rally comes after cryptocurrency prices plunged last week as risk assets such as stocks sold off following Russia’s invasion of Ukraine.



Ether was up nearly 11% at $2,922.86.



Over the years, bitcoin proponents have touted the cryptocurrency as “digital gold,” an asset that provides a safe haven for investors during times of turmoil or even as a potential hedge against inflation. But bitcoin has not performed that way. Instead, it has been more correlated to the movement of stock prices, even as inflation continues to hit multi-year highs and a military conflict plays out. That case for bitcoin as digital gold has unraveled in recent weeks.



Vijay Ayyar, vice president of corporate development and international at crypto exchange Luno, said that could be changing.



“Bitcoin and cryptocurrencies are arguably having their watershed moment against backdrop of global uncertainty and tension related to the Russia-Ukraine crisis,” Ayyar told CNBC.



<h3 class="wp-block-heading">Read more: <a href="https://www.cnbcafrica.com/2022/stocks-rise-rouble-jumps-over-1-ahead-of-u-s-russia-talks/">Stocks rise; rouble jumps over 1% ahead of U.S.-Russia talks</a></h3>



“Crypto is decoupling from traditional markets and can be clearly seen in the performance.”



People have been donating cryptocurrency to the Ukrainian army too, “proving that crypto is fundamentally a technology that cannot be ignored,” Ayyar added.



He also said that a bottom for bitcoin was already forming as the war was getting underway.



Michael Rinko, venture associate at AscendEx, told CNBC on Monday that $38,000 was a key level for bitcoin.



“More people bought at $38,000 than at any other level above or below for a good margin,” he said.



<h2 class="wp-block-heading" id="h-further-sanctions"><a></a>Further sanctions</h2>



Bitcoin’s rally comes as the U.S. imposed further sanctions on Russia. Washington targeted Russia’s central bank, effectively prohibiting Americans from doing any business with the bank as well as freezing its assets within the U.S.



That comes on top of sanctions that have targeted oligarchs and Russia’s sovereign debt as well as moves aimed at cutting the country off from the global financial system.



Debate has been raging over whether bitcoin, which is not owned or issued by a single authority like a central bank, could be used by Russia to evade sanctions. But the amount of money that Russia would need to convert to and from bitcoin might be too much, according to Ari Redbord, head of legal and government affairs at TRM Labs.



<h3 class="wp-block-heading">Read more: <a href="https://www.cnbcafrica.com/2022/the-case-for-bitcoin-as-digital-gold-is-falling-apart/">The case for bitcoin as ‘digital gold’ is falling apart</a></h3>



“You’re going to see Russia attempt to circumvent the U.S. financial system by turning to crypto. I think the issue is … the liquidity just simply isn’t there,” Redbord told CNBC’s “Squawk Box Asia.”



On Sunday, Mykhailo Fedorov, vice prime minister of Ukraine, asked major cryptocurrency exchanges to block the addresses of Russian users.



Binance, the world’s largest exchange, said it would freeze accounts for any Russians on the sanctions list, but would not “unilaterally” block accounts of all Russian users.



Other cryptocurrency exchanges took a similar stance.



— CNBC’s Tanaya Macheel contributed to this report.

106928219-1629130755312-gettyimages-1234311531-sindeyev-notitle210729_np12K-1

Bitcoin jumps 13% as Russia-Ukraine conflict continues and U.S. imposes further sanctions

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="740" height="416" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/02/104893268-GettyImages-818871806.jpg" alt="" class="wp-image-415449" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/02/104893268-GettyImages-818871806.jpg 740w, https://cms.cnbcafrica.com/wp-content/uploads/2022/02/104893268-GettyImages-818871806-300x169.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/02/104893268-GettyImages-818871806-160x90.jpg 160w" sizes="auto, (max-width: 740px) 100vw, 740px" /><figcaption>Bitcoin on a mound of gold. bodnarchuk | iStock Editorial | Getty Images</figcaption></figure>



A key investment case for&nbsp;<a href="https://www.cnbcafrica.com/quotes/btc=x/">bitcoin</a>&nbsp;is deteriorating as geopolitical uncertainty and rising inflation hammer cryptocurrency prices.



The price of bitcoin&nbsp;fell to a two-week low&nbsp;Tuesday after Russian President Vladimir Putin ordered troops into Donetsk and Luhansk, two breakaway regions in eastern Ukraine, shortly after declaring them as independent.



Bitcoin is often referred to as “digital gold” by its backers. The term refers to the idea that bitcoin can provide a store of value similar to&nbsp;gold&nbsp;— one that’s uncorrelated with other financial markets, like stocks.



Bitcoin bulls also see the cryptocurrency as a “safe haven” asset that can serve as a hedge against global economic uncertainty and increasing prices, which reduce the purchasing power of sovereign currencies like the&nbsp;U.S. dollar.



<h3 class="wp-block-heading">Read more: <a href="https://www.cnbcafrica.com/2022/cryptocurrencies-tumble-with-bitcoin-falling-8-and-ether-down-9-in-the-last-24-hours/">Cryptocurrencies tumble, with bitcoin falling 8% and ether down 9% in the last 24 hours</a></h3>



With inflation at historic highs, you’d expect this would be bitcoin’s time to shine — U.S. consumer prices last month&nbsp;rose the most since February 1982, according to Labor Department figures.



Instead, the cryptocurrency has lost almost half of its value since reaching an all-time high of nearly $69,000 in November. That’s led analysts to question whether its status as a form of “digital gold” still rings true.



“Bitcoin is still early in its maturity curve to be firmly placed in the category&nbsp;of ‘digital gold,’” Vijay Ayyar, vice president of corporate development and international at crypto exchange Luno, told CNBC.



<h2 class="wp-block-heading" id="h-safe-haven-or-risk-asset"><a></a>Safe haven or risk asset?</h2>



The latest declines for bitcoin came in tandem with a rout in global stocks, with the&nbsp;S&amp;P 500&nbsp;closing out Tuesday’s session in&nbsp;correction territory. Bitcoin’s price has increasingly been tracking moves in the stock market, with correlation between bitcoin and the S&amp;P 500 steadily rising.



Experts say cryptocurrencies have become more closely linked to other speculative parts of the market such as tech stocks, which are falling due to fears that lofty valuations may come down as the&nbsp;Federal Reserve&nbsp;and other central banks begin to hike interest rates and wind down their huge stimulus packages.



“The correlation between crypto and stocks has been high over the last few months on both inflation-related macro news and the Russia-Ukraine geopolitical situation,” Chris Dick, a quantitative trader at crypto market maker B2C2, told CNBC.



<h3 class="wp-block-heading">Read more: <a href="https://www.cnbcafrica.com/2022/130-billion-wiped-off-crypto-markets-in-24-hours-as-bitcoin-ether-drop-to-multi-month-lows/">$130 billion wiped off crypto markets in 24 hours as bitcoin, ether drop to multi-month lows</a></h3>



“This correlation shows that bitcoin is firmly behaving like a risk asset at the moment — not the safe haven it was touted to be a few years ago.”



In fact, gold has actually been outperforming bitcoin lately. Spot rates for the precious metal reached their highest levels since June 1 on Tuesday, climbing as high as $1,913.89 per troy ounce.



“Bitcoin, the asset purported to be the answer to every question, has quietly weakened and is notably underperforming its arch enemy, gold,” John Roque, head of technical strategy&nbsp;at 22V Research, said in a research note Monday.



“We’re looking for Bitcoin to get back to 30,000 and then break below there and we continue to expect gold will make a new all-time high.”



<h2 class="wp-block-heading"><a></a>‘Crypto winter’</h2>



Bitcoin’s slump has resulted in increased talk about a prolonged bear market known as “crypto winter.” The last such occurrence of this took place during late 2017 and early 2018, when bitcoin plunged as much as 80% from then-record highs of close to $20,000.



Not all analysts are convinced the latest downturn in digital currency prices is indicative of a crypto winter, though, with many saying market conditions have changed. There are now plenty of institutions holding bitcoin which, according to experts, is one reason for why it’s become more closely correlated with stocks.



“The adoption of cryptocurrencies by investors from traditional asset classes is the driving force behind bitcoin’s correlation with equities,” B2C2′s Dick said. However, he added: “This relationship has the potential to be broken at any time given the different fundamentals for each market.”



<h3 class="wp-block-heading">Read more: <a href="https://www.cnbcafrica.com/2021/crypto-trading-thrives-in-nigeria-despite-official-disapproval/">Crypto trading thrives in Nigeria despite official disapproval</a></h3>



To compete more effectively with gold as a store of value, bitcoin needs to achieve more widespread adoption, according to Luno’s Ayyar.



“The fundamentals have always&nbsp;made sense — limited supply currency not affiliated with any nation state,” he said.



“But bitcoin needs to undergo its due process of monetization, where it’s held by a large enough pool of participants — more retail flow, larger institutions adding bitcoin to their balance sheets, [and] potentially&nbsp;more nation states&nbsp;after El Salvador&nbsp;buying Bitcoin.”

The case for bitcoin as ‘digital gold’ is falling apart

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="740" height="416" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/02/107017289-1645181629703-gettyimages-462418965-78050369.jpeg" alt="" class="wp-image-415362" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/02/107017289-1645181629703-gettyimages-462418965-78050369.jpeg 740w, https://cms.cnbcafrica.com/wp-content/uploads/2022/02/107017289-1645181629703-gettyimages-462418965-78050369-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/02/107017289-1645181629703-gettyimages-462418965-78050369-160x90.jpeg 160w" sizes="auto, (max-width: 740px) 100vw, 740px" /><figcaption>Thomas Trutschel | Photothek | Getty Images</figcaption></figure>



<a href="https://www.cnbcafrica.com/quotes/btc=x/">Bitcoin</a>&nbsp;may not see a bull market until late 2024 or the beginning of 2025, if past price cycles are any indication, according to the co-founder of Huobi, one of the world’s largest cryptocurrency exchanges.



Du Jun told CNBC that bitcoin bull markets are closely tied to a process called halving, which occurs every few years.



This relates to so-called miners on the bitcoin network,&nbsp;which&nbsp;run powerful specialized computers to solve complex mathematical puzzles to validate transactions on the bitcoin network.&nbsp;Miners are rewarded in bitcoin as a result.



Halving is written into bitcoin’s underlying code and cuts in half the reward that so-called miners get for validating transactions on the cryptocurrency’s network. It occurs roughly every four years.



The last&nbsp;halving took place in May 2020, and in 2021,&nbsp;bitcoin topped an all-time high above $68,000. A similar occurrence happened when halving took place in 2016. The following year, bitcoin hit what was&nbsp;at the time a record high.



<h3 class="wp-block-heading" id="h-read-more-cryptocurrencies-tumble-with-bitcoin-falling-15-and-ether-down-20">Read more: <a href="https://www.cnbcafrica.com/2022/cryptocurrencies-tumble-with-bitcoin-falling-15-and-ether-down-20/">Cryptocurrencies tumble, with bitcoin falling 15% and ether down 20%</a></h3>



Following both those peaks, bitcoin tumbled. Currently, bitcoin is sat nearly 40% off its record high from November, though it’s still off some of the lows seen in January. The next halving event is scheduled to take place in 2024.



“If this circle continues, we are now at the early stage of a bear market,” Du said, according to a CNBC translation of his comments in Mandarin.



“It is really hard to predict exactly because there are so many other factors which can affect the market as well — such as geopolitical issues including war, or recent Covid, also affect the market,” he said.



“Following this cycle, it won’t be until end of 2024 to beginning of 2025 that we can welcome next bull market on bitcoin.”



The recent price drop in cryptocurrency has&nbsp;got some market participants&nbsp;worried that a so-called “crypto winter,” or an extended period of bearishness, could be imminent. During such times, bitcoin&nbsp;may trade in a sideways pattern.

107017289-1645181629703-gettyimages-462418965-78050369

Next bitcoin bull run won’t happen until end 2024, says top crypto exchange co-founder

The bitcoin narrative could be tested this week as investors monitor tense developments between Ukraine and Russia and weigh the possibility of the Federal Reserve hiking interest rates by 50 basis points, or 0.5 percentage points, in March.



The largest cryptocurrency by market capital currency has long been regarded by early investors and enthusiasts as a safe haven asset — one that ideally could offset risk in investors’ portfolios and limit exposure to negative shocks.



However, in recent months bitcoin has has been trading like equities, specifically like riskier growth-oriented stocks. It’s still recovering from a big drop from earlier in the year, when rising rates led investors to shed positions in tech and other risky assets.



“Bitcoin is labeled by some as a stateless currency, and it has indeed performed well in the past when there were geopolitical tensions, so we could expect some demand as a safe haven asset,” said Yuya Hasegawa, crypto market analyst at Japanese bitcoin exchange Bitbank.



However, “the change in the landscape made bitcoin fragile to the U.S. stock market volatility, so bitcoin investors may not be able to feel at ease until the situation at the Russia-Ukraine border starts to settle down,” he added.



<h2 class="wp-block-heading" id="h-crypto-winter-for-a-few-months">Crypto winter for a few months</h2>



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="740" height="416" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/02/107005904-1643117857182-gettyimages-1237577245-widak-bitcoind220106_npTUo-1-1.jpg" alt="" class="wp-image-415262" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/02/107005904-1643117857182-gettyimages-1237577245-widak-bitcoind220106_npTUo-1-1.jpg 740w, https://cms.cnbcafrica.com/wp-content/uploads/2022/02/107005904-1643117857182-gettyimages-1237577245-widak-bitcoind220106_npTUo-1-1-300x169.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/02/107005904-1643117857182-gettyimages-1237577245-widak-bitcoind220106_npTUo-1-1-160x90.jpg 160w" sizes="auto, (max-width: 740px) 100vw, 740px" /><figcaption>Artur Widak | NurPhoto | Getty Images</figcaption></figure>



The price of bitcoin is about 10% down for the year, according to Coin Metrics, and about 38% from its November all-time high.



With a rising rate environment, tech and growth stocks could remain in a chokehold for a while. That means if this is crypto winter, a term that refers to an extended bearish period, it could last for several months more.



“If we are in a bear market we’ll see another eight or nine months of sideways to down [movement], which is an opportunity for the tourists to leave the market and the real players to continue building this technology,” said Chris King, CEO and founder of Eaglebrook Advisors.



<h3 class="wp-block-heading" id="read-more-130-billion-wiped-off-crypto-markets-in-24-hours-as-bitcoin-ether-drop-to-multi-month-lows">Read more: <a href="https://www.cnbcafrica.com/2022/130-billion-wiped-off-crypto-markets-in-24-hours-as-bitcoin-ether-drop-to-multi-month-lows/">$130 billion wiped off crypto markets in 24 hours as bitcoin, ether drop to multi-month lows</a></h3>



Katie Stockton, founder of Fairlead Strategies, said a resistance level at $46,730 should remain intact this week. Support is near $37,360, but bitcoin doesn’t look in store for a near-term test, she added.



Seasoned crypto investors have been here before and are rarely spooked by extended low periods. Bitcoin has experienced only one crypto winter before: In 2018, its price crashed by about 80% from its then all-time high. The market has evolved significantly since then.



<h2 class="wp-block-heading" id="setting-the-stage-for-the-next-bull-market"><a></a>Setting the stage for the next bull market</h2>



Low periods are a time for the industry to clean up and build the infrastructure and applications that will make it easier for the next wave of newcomers in the next bull market. Between decentralized finance, nonfungible&nbsp;tokens, the metaverse and more, there’s plenty of interest in new sectors of crypto that go beyond bitcoin.



“Use cases in adoption are burgeoning,” said Rodrigo Vicuna, chief financial officer at Prime Trust. “We’re just beginning to scratch the surface of where a lot of blockchains are going.”



For example, interest — and money — in NFTs boomed in 2021. Most people still only see them as digital art, a concept that’s hard to grasp for many. People also overlook other potential uses for NFTs. For instance, an NFT of a house deed could provide a history of property ownership, while NFT medical records may offer patients a safe way to share information with doctors, Vicuna said.



<h3 class="wp-block-heading" id="read-more-the-federal-reserve-is-scaring-markets-with-the-triple-threat-of-policy-tightening">Read more: <a href="https://www.cnbcafrica.com/2022/the-federal-reserve-is-scaring-markets-with-the-triple-threat-of-policy-tightening/">The Federal Reserve is scaring markets with the triple threat of policy tightening</a></h3>



King noted that despite new interest in decentralized finance, or DeFi, its still too early and underdeveloped for it to take off. DeFi allows users to participate in lending and other financial activities using blockchain and do so without any middlemen.



“We’re very long DeFi in some of our strategies,” King said as an example. “DeFi is still speculative. The infrastructure is still being built, it’s still clunky and hard to use. “Bitcoin in 2013 through 2016 was hard to buy, but companies like Coinbase and Gemini made it easier. DeFi needs that onramp to improve it and make it less speculative. It just takes time.”



With the bitcoin cycle lengthening and returns diminishing, these other assets play a big role in ushering new entrants into crypto broadly and increasing adoption. Bitcoin itself hasn’t found its killer app yet — that is, the feature that makes it indispensable — King said, but increasing adoption will get it there.



“The most important thing that we follow and look at both from a short- and long-term perspective is adoption, it’s really all that matters,” King said. Like Facebook, Instagram and Uber, he said, “hype around these assets and the price going up led to more users joining the network, which is ultimately what we care about.”

107005904-1643117857182-gettyimages-1237577245-widak-bitcoind220106_npTUo-1-1

Here’s the outlook for bitcoin as geopolitical tensions heat up and interest rates rise

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="740" height="416" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/01/106885587-16214575182021-05-19t203912z_144465080_rc28jn9cpt2v_rtrmadp_0_crypto-currency-bitcoin-1.jpeg" alt="" class="wp-image-414803" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/01/106885587-16214575182021-05-19t203912z_144465080_rc28jn9cpt2v_rtrmadp_0_crypto-currency-bitcoin-1.jpeg 740w, https://cms.cnbcafrica.com/wp-content/uploads/2022/01/106885587-16214575182021-05-19t203912z_144465080_rc28jn9cpt2v_rtrmadp_0_crypto-currency-bitcoin-1-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/01/106885587-16214575182021-05-19t203912z_144465080_rc28jn9cpt2v_rtrmadp_0_crypto-currency-bitcoin-1-160x90.jpeg 160w" sizes="auto, (max-width: 740px) 100vw, 740px" /><figcaption>A representations of virtual currency Bitcoin is seen in front of a stock graph in this illustration taken May 19, 2021. Dado Ruvic | Reuters</figcaption></figure>



The cryptocurrency market had around $130 billion wiped off its value over the last 24 hours as major digital coins continued their multi-day sell-off.



<a href="https://www.cnbcafrica.com/quotes/btc=x/">Bitcoin</a> was last down around 4% at $33,755.57, according to Coin Metrics, while <a href="https://www.cnbcafrica.com/quotes/eth=x/">Ether</a> plunged 7% to $2,239.08. Earlier in the morning both fell to their lowest points since July and are each about 50% off their all-time highs.



Cryptocurrencies are moving in tandem with stocks, which have continued to fall since the beginning of the year and just came off of their worst week since March 2020. Investors have been selling risk assets like technology stocks as they prepare for tighter monetary policy from the U.S. Federal Reserve and higher interest rates.



“Bitcoin and crypto have been reacting much more violently, given the nature of the asset class and we’re likely to test 30-32K given current sentiment and momentum,” Vijay Ayyar, vice president of corporate development and international expansion, told CNBC by written message.



<h3 class="wp-block-heading" id="h-read-more-cryptocurrencies-tumble-with-bitcoin-falling-15-and-ether-down-20">Read more: <a href="https://www.cnbcafrica.com/2022/cryptocurrencies-tumble-with-bitcoin-falling-15-and-ether-down-20/">Cryptocurrencies tumble, with bitcoin falling 15% and ether down 20%</a></h3>



Ayyar said that if bitcoin holds above $30,000 on a longer time frame such as one week, then there could be a base formed at those levels before the market moves higher. It could be some time for the market to turn bullish given the lack of confidence across the spectrum, he added.



Several other analysts have said they see $30,000 as the next level of support for the cryptocurrency to test. However, analyst John Roque of 22V Research said bitcoin could fall even further. He said he too has been using $30,000 as a target but noted that the median historical bear market for bitcoin is down 78%. Bitcoin is currently about 50% off of its all-time high.



“A 78% decline from the bitcoin high of nearly $69,000 would imply a potential downside figure of about $15,000,” he said in a note Monday. “It’s probably safe to say that not one bitcoin bull has that figure in their model. To be sure, we don’t either… but we think it’s worth keeping in our back pocket in case we need it.”



Investors are also grappling with rising inflation. Bitcoin proponents have long suggested the digital coin is a hedge against inflation, but that theory has not held up for many newer investors. As institutional interest poured into bitcoin last year, there are more short-term investors in the crypto market valuing bitcoin like a tech stock than ever before. Analysts say there’s concern a more hawkish Fed could take the wind out of the crypto market’s sails.



Meanwhile, investors are also assessing the impact of further regulation on the cryptocurrency market. Last week, Russia’s central bank proposed banning the use and mining of cryptocurrencies.

106885587-16214575182021-05-19t203912z_144465080_rc28jn9cpt2v_rtrmadp_0_crypto-currency-bitcoin-1

$130 billion wiped off crypto markets in 24 hours as bitcoin, ether drop to multi-month lows

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="740" height="416" src="https://cms.cnbcafrica.com/wp-content/uploads/2021/10/106957228-1633755515333-gettyimages-1312493974-_48p7891_2021041460349748.jpeg" alt="" class="wp-image-412808" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2021/10/106957228-1633755515333-gettyimages-1312493974-_48p7891_2021041460349748.jpeg 740w, https://cms.cnbcafrica.com/wp-content/uploads/2021/10/106957228-1633755515333-gettyimages-1312493974-_48p7891_2021041460349748-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2021/10/106957228-1633755515333-gettyimages-1312493974-_48p7891_2021041460349748-160x90.jpeg 160w" sizes="auto, (max-width: 740px) 100vw, 740px" /><figcaption>Bitcoin on display.
Chesnot | Getty Images</figcaption></figure>



<a href="https://www.cnbcafrica.com/quotes/btc=x/">Bitcoin</a> prices fell sharply on Friday, while ether prices also dived, wiping off nearly $150 billion from the crypto market.



Bitcoin fell about 15% and was trading around $36,000 late Friday, according to Coin Metrics. <a href="https://www.cnbcafrica.com/quotes/eth=x/">Ether</a>, the second-largest cryptocurrency by market cap, dived about 20% to trade around $2,500.



The declines in cryptocurrencies follow Wall Street losses on Thursday. The Nasdaq Composite lost 7.6% this week, and the S&amp;P 500 fell 5.7% for its third straight weekly decline.



Rising rates have prompted investors to shed positions in riskier assets. Earlier this week, the benchmark 10-year Treasury yield traded above 1.9%.



The Federal Reserve have also indicated it plans to begin reducing its balance sheet, as well as tapering of bonds and raising interest rates.



A common investment case for bitcoin is that it serves as a hedge against rising inflation as a result of government stimulus, but analysts are saying the risk is that a more hawkish Federal Reserve may take the wind out of bitcoin’s sails.



<h3 class="wp-block-heading" id="h-read-more-cryptocurrencies-tumble-with-bitcoin-falling-8-and-ether-down-9-in-the-last-24-hours">Read more: <a href="https://www.cnbcafrica.com/2022/cryptocurrencies-tumble-with-bitcoin-falling-8-and-ether-down-9-in-the-last-24-hours/">Cryptocurrencies tumble, with bitcoin falling 8% and ether down 9% in the last 24 hours</a></h3>



As yields pulled back later in the week, however, foreign exchange trading firm Oanda senior market analyst Edward Moya said it was “a little disappointing to not see bitcoin react more positively to the reversal in Treasury yields.”



Bitcoin prices have fallen sharply since November, tumbling more than 40% from a record high of about $69,000.



Some experts warn that the crypto market could be heading toward a downturn soon, as heightened regulatory scrutiny and intense price fluctuations dampened bitcoin’s prospects.



Regulators are cracking down on cryptocurrencies too. China completely banning all crypto-related activities and U.S. authorities are also clamping down on certain aspects of the market.



In a Thursday note, Oanda’s Moya had predicted that bitcoin could tumble below $40,000 as Russia’s central bank had proposed a ban over the use and mining of cryptocurrencies on Russian territory, claiming the digital currency poses a risk to “financial stability and monetary policy sovereignty.”



Russia is among the top three countries for bitcoin mining, he noted.



—&nbsp;CNBC’s Ryan Browne contributed to this report.



Correction: This article has been updated to reflect that bitcoin’s all-time high in November was about $69,000.

106957228-1633755515333-gettyimages-1312493974-_48p7891_2021041460349748

Cryptocurrencies tumble, with bitcoin falling 15% and ether down 20%

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="740" height="416" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/01/105575331-1542244532670gettyimages-1035974108.jpeg" alt="" class="wp-image-414747" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/01/105575331-1542244532670gettyimages-1035974108.jpeg 740w, https://cms.cnbcafrica.com/wp-content/uploads/2022/01/105575331-1542244532670gettyimages-1035974108-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/01/105575331-1542244532670gettyimages-1035974108-160x90.jpeg 160w" sizes="auto, (max-width: 740px) 100vw, 740px" /><figcaption>A photo illustration of the digital Cryptocurrency, Litecoin (LTC), Bitcoin (BTC), Ethereum (ETH) and Ripple (XRP) are seen on September 13 2018 in Hong Kong, Hong Kong. Yu Chun Christopher Wong | S3studio | Getty Images</figcaption></figure>



Bitcoin prices fell sharply on Thursday night, while ether prices also dived, wiping off nearly $150 billion from the crypto market.



Bitcoin fell by nearly 8% in the last 24 hours, and was trading at $38,709 as of 1:42 a.m. ET, according to CoinDesk data.



Ether, the second-largest cryptocurrency by market cap, dived over 9% in the last 24 hours. It was trading at $2,853 as of 1:42 a.m. ET, after falling as low as $2,809.51 in the last 24 hours, according to CoinDesk.



About $147 billion was wiped off the entire cryptocurrency market in the past 24 hours, according to Coinmarketcap.com



The declines in cryptocurrencies follow Wall Street losses on Thursday. The Nasdaq was down almost 5% this week, and the S&amp;P 500 is into its third straight week of losses.



As the 10-year U.S. Treasury yield spiked earlier this week, rising rates have caused investors to shed their positions in riskier assets. Yields move opposite to prices.



The Federal Reserve have also indicated it plans to begin reducing its balance sheet, as well as tapering of bonds and raising interest rates.



<h3 class="wp-block-heading" id="h-read-more-bitcoin-holds-steady-below-50-000-in-volatile-weekend-trading">Read more: <a href="https://www.cnbcafrica.com/2021/bitcoin-holds-steady-below-50000-in-volatile-weekend-trading/">Bitcoin holds steady below $50,000 in volatile weekend trading</a></h3>



A common investment case for bitcoin is that it serves as a hedge against rising inflation as a result of government stimulus, but analysts are saying the risk is that a more hawkish Federal Reserve may take the wind out of bitcoin’s sails.



As yields pulled back later in the week, however, foreign exchange trading firm Oanda’s Senior Market Analyst Edward Moya said it was “a little disappointing to not see bitcoin react more positively to the reversal in Treasury yields.”



Bitcoin prices have fallen sharply since November, tumbling more than 40% from a record high of about $69,000.



Some experts warn that the crypto market could be heading toward a downturn soon, as heightened regulatory scrutiny and intense price fluctuations dampened bitcoin’s prospects.



Regulators are cracking down on cryptocurrencies too. China completely banning all crypto-related activities and U.S. authorities are also clamping down on certain aspects of the market.



In a Thursday note, Oanda’s Moya had predicted that bitcoin could tumble below $40,000 as Russia’s central bank had proposed a ban over the use and mining of cryptocurrencies on Russian territory, claiming the digital currency poses a risk to “financial stability and monetary policy sovereignty.”



Russia is among the top three countries for bitcoin mining, he noted.



—&nbsp;CNBC’s Ryan Browne contributed to this report.



— Correction: This article has been updated to reflect that bitcoin’s all-time high in November was about $69,000.

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Here’s the outlook for bitcoin as geopolitical tensions heat up and interest rates rise

$130 billion wiped off crypto markets in 24 hours as bitcoin, ether drop to multi-month lows

Cryptocurrencies tumble, with bitcoin falling 15% and ether down 20%

Cryptocurrencies tumble, with bitcoin falling 8% and ether down 9% in the last 24 hours

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Small players lose faith in crypto after sell-off