Cryptocurrency prices tumbled after Russia proposed banning the use and mining of cryptocurrencies while traders fret over an impending blow to the market's liquidity from the quantitative easing tapering and interest rate hikes.
Bitcoin slipped below the US$40,000 level to $35,226 yesterday at 1pm while Ethereum plunged below $3,000 to $2,446.
Cryptocurrency prices slightly rebounded yesterday but the total market cap still stood lower than $2 trillion at $1.7 trillion.
According to Bloomberg, the world's top 5 tech billionaires lost a combined wealth of 2.2 trillion baht or $67 billion due to the price decreases last week.
The global crypto market has been seeing a heavy selloff since Jan 21, after the Russian central bank slapped a ban on the use and mining of all cryptocurrencies, saying they are speculative assets with a high potential of a bubble that could be a threat to the country's financial security.
Once the ban is imposed, Russian institutional investors will be barred from holding any asset associated with crypto-related operations. A mechanism to prevent and detect any trading transaction related to cryptocurrencies will also be developed and put into operation.
Russia has been one of the countries with the largest volume of crypto-related transactions with an average trading volume of up to $5 billion per year.
Russia is also the third largest Bitcoin mining source in the world after the US and Kazakhstan.
The Russian central bank said Bitcoin mining consumes a huge amount of energy derived from fossil fuels which harm the environment.
Poramin Insom, co-founder and director of Satang Corp, said the global crypto market has been affected by a number of factors, including Russia's ban on the asset and the Federal Reserve' hawkish stance on its monetary policies that is pressuring liquidity in the market.
However, despite the price declines, he said Bitcoin still has potential for growth in the medium and long term as the market expands and people increasingly accept the coin as the main digital currency to solve the current pain points of fiat money.
He also advised investors to be patient and hold the coin for the long term as cryptocurrency prices are inherently volatile and typically fluctuate. They can sell and take profit when the prices shoot up again, he said.
Piriya Sambandaraksa, a specialist in crypto price analysis and blockchain technology and a founder of investment education website Chaloke Dot Com, believes cryptocurrencies will continue to win acceptance from every sector as people are becoming more knowledgeable about the digital currencies.
Although many traditional financial institutions are enacting more stringent regulations and banning cryptocurrencies, these institutions cannot go against the tide of time, he said.