The value of Bitcoin fell sharply yesterday to only above $30,000 at one point, losing quite half since it reached an all-time high of nearly $65,000 in mid-April. what’s Happening to Bitcoin? consistent with economists at Deutsche Bank, this sharp drop mostly occurred for 2 reasons. Last week, Elon Musk tweeted that Tesla wouldn’t accept Bitcoin as a way of payment, and on Tuesday, the People’s Bank of China (PBoC) reiterated that digital tokens can’t be used as a sort of payment. What’s more, as cryptocurrencies begin to significantly compete with regular currencies and fiat currencies, regulators and policymakers will clamp down .
More governments will contain cryptocurrencies
“When Elon Musk announced that Tesla would stop taking Bitcoin as payment thanks to concerns about the extraordinary amounts of energy needed to process transactions, he wasn’t saying anything new. Energy use increases proportionally with the cryptocurrency’s market valuation. As such, numerous alarms are warning us about the environmental impact caused by cryptocurrency energy consumption. Some have said this impact might be ameliorated by using capital within the cryptocurrency market to develop green technological advancements. this is often called a ‘positive externality’; that’s , technological innovation within the financial sector would drive innovation within the energy sector.”
“The PBoC stated on Tuesday that a virtual currency ‘is not a true currency’ and ‘should not and can’t be used as currency within the market.’ But again, there’s nothing new here. it’s clear that China’s targeted regulatory actions are designed to support the launch its digital currency (CBDC). The PBoC has not yet revealed a selected timeline for its official Digital Currency/Electronic Payment (DC/EP) rollout, but the govt aims to possess its CBDC ready for widespread use in time for the Beijing Winter Olympic Games in February 2022.”
“Following a comprehensive market consultation in early 2020, the EU proposed one regulation for all crypto-assets including cryptocurrencies that weren’t already governed by existing regulations (e.g. MiFIDII). The new regulation, which is named the Markets in Crypto-Assets Regulation (MiCAR), is predicted to require effect by the top of this year or early next.”
“The United States government has taken numerous regulatory actions since early 2019, like the Framework for Digital Assets. The new Biden administration is predicted to determine a collaborative and unified strategy to regulate the prevailing comprehensive regulatory framework and establish new regulations as required to supply legal certainty.”