Crypto Plunges as US Fed Examines Potential Central Bank Digital Currency

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Bitcoin, the world’s largest crypto-asset, started the week trading above $42,000 but began falling sharply on Thursday as bond yields from major economies soared. It is now trading just below the $35,000 level.

Welcome to the first of our weekly crypto updates with eToro market analyst Simon Peters.

Each week Peters will assess what is happening in the crypto, blockchain and NFT spaces and, if anything, what the news means for investors.

Crypto-assets plunge

The crypto-asset market plunged amid a broader global sell-off in growth and technology assets.

Bitcoin (BTC) is now trading at its lowest level since July 2020 and has fallen around 50% from its all-time high (ATH) above $69,000 which it reached in November 2021.

The world’s largest crypto-asset started the week trading above $42,000, but began to fall sharply on Thursday as bond yields from major economies soared. It is now trading just below the $35,000 level.

Likewise, Ether is now trading at similar levels to July 2020 and has lost around 50% of its value since ATH in November. The cryptoasset started the week above $3,200 but has fallen sharply to just under $2,400 now.

Fed Launches CBDC Review

The US Federal Reserve has launched a review of a potential central bank digital currency (CBDC).

The Fed has launched a discussion paper examining the pros and cons of a possible US CBDC. It now asks respondents to comment on how the CBDC could improve US domestic payment systems.

Fed Chairman Jerome Powell commented, “We look forward to engaging with the public, elected officials and a wide range of stakeholders as we consider the positives and negatives of a central bank digital currency in the United States”.

The Fed wants to examine key issues such as preserving monetary and financial stability within a digital system, how to complement existing payment systems, and citizen privacy while retaining the ability to control illegal financial activity .

This announcement is a major milestone as the United States is the largest economy in the world, which would have the potential to transform global finance with the adoption of a CBDC. But it is behind other nations in researching, planning and executing a digital currency.

Twitter launches NFT profile pictures

Social media network Twitter has launched NFT profile pictures for users.

The feature will be instantly recognizable to anyone with an NFT profile picture because instead of a typical round profile picture, the picture frame will be hexagonal instead.

Twitter’s NFT launch will support crypto wallets including Argent, Coinbase Wallet, Ledger Live, MetaMask, Rainbow, and Trust Wallet.

To use this feature, users will need to use an iOS phone and be signed up for the $2.99 ​​Twitter Blue subscription. Twitter Blue offers premium features to customers, now including NFTs and others such as undoing tweets.

The premium subscription is still rolling out and is currently only available in the US, Canada, Australia, and New Zealand.

Intel to enter BTC mining

Computer chip maker Intel is about to unveil a chip to mine bitcoin.

The so-called “Bonanza Mine” chip will be launched at the International Semiconductor Circuits Conference (ISSCC) which begins on February 20.

This announcement, however, does not mean that Intel will start mining BTC itself – rather it will produce technology to facilitate mining.

The company’s current biggest rival in this market is Bitmain. There is a demand for bitcoin-specific mining chips, as normal graphics processing units (GPUs) are not designed to solve complex hashes and therefore mine BTC very inefficiently, both in terms of of time and energy spent.

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