Influence of Regulators
The cost of a cryptocurrency is directly related to the financial policy in countries that occupy a leading position in the mining and circulation of coins. At the moment, several countries have proposed to tighten pressure on the cryptocurrency market:
- Singapore
- Russia
- Great Britain
- Spain
The devastating report of the Central Bank of Russia had a great influence on the price of bitcoin. They directly stated the signs of a financial pyramid, the participation of cryptocurrency in illegal activities and the threat to financial stability in the country. This has caused the price of bitcoin to drop to it's all-time low since August 2021. This correlation is due to the fact that Russia is one of the top three bitcoin miners after the US and Kazakhstan. For the same reason, the political situation in Kazakhstan also contributed to the collapse of the bitcoin price in January 2022.
If the Central Bank of Russia announces an official ban on mining and operations with cryptocurrency in the country, this could provoke a further collapse in bitcoin prices. Crypto exchange Binance has announced its agreement to cooperate with the authorities to detect money laundering operations. So the exchange wants to avoid a ban and forced transfer of activities to other countries, as was the case with China before.
Influence of the US Monetary Policy
The cost of cryptocurrency is also closely related to the decisions of the US Federal Reserve. The anticipated monetary policy tightening that is expected in March of this year may adversely affect the value of major coins.
A direct correlation is also seen with the US stock market, since the same players are involved in both areas.
What to Expect
The main influence on the cost of cryptocurrencies is exerted by the regulators of the countries - main crypto miners and users. Now it is important to follow the news in order to respond in a timely manner to any tightening or loosening of coin policies.
Unfortunately, no one can give an accurate forecast regarding bitcoin. Some analysts expect the price to fall further, as in December-January, as a rule, the market is under the influence of bears. Other experts argue that the price has reached an important price level and in the near future we should expect a market reversal and bitcoin will continue to grow.