04.02.2022

Monthly report of January

Monthly report of January

This monthly report examines the most important cryptocurrency news in January and delves into cryptocurrency news related to several countries.

              
January in the cryptocurrency market

The year started quite negatively in terms of price movements in the cryptocurrency market, as in fact, the entire cryptocurrency market declined during January. Of the cryptocurrencies offered by Northcrypto, Chainlink and Bitcoin survived with the smallest drop, as their prices were about 10 and 15 percent lower at the end of the month than at the beginning of the month. On the other hand, the prices of Litecoin and Ethereum fell by about 25 percent in January, while the price of Aave collapsed by almost 40 percent.

The decline in cryptocurrency prices was driven by several factors in January. However, perhaps the most significant of these was information about the US Federal Reserve’s plans to pursue a tighter monetary policy in the near future. This refers, among other things, to more interest rate hikes than expected for the current year. This interest rate refers to the rate at which the central bank lends money to banks.

Cryptocurrency news of Russia and the United States

There were several comments on cryptocurrencies from Russia in January. First, the central bank of Russia proposed a ban on the use and mining of cryptocurrencies in the country. According to the central bank, cryptocurrencies threaten economic stability, the well-being of citizens, and monetary sovereignty. However, shortly after the central bank’s comments, Ivan Chebeskov, the director of the financial policy department at the Russian Ministry of Finance, told he opposed the central bank’s proposal and said the country should regulate cryptocurrencies rather than ban them. In addition to Chebeskov, President Vladimir Putin also commented on the central bank's proposal. Putin was also not in favor of the central bank's ban on cryptocurrencies and pointed out that Russia has certain competitive advantages in cryptocurrency mining. With these competitive advantages, he referred to surplus electricity and well-educated individuals.

There was some news from the U.S. in January about the cryptocurrency plans of several states. Very interesting and unpredictable news came from the southwestern state of Arizona. Wendy Rodgers, a member of the Arizona Senate, made a bill to make Bitcoin legal tender in the state. While the bill is unlikely to become a law, it is still a significant proposal that is getting a lot of attention and discussion in the U.S.

There was also active commenting on cryptocurrencies and especially Bitcoin in the run-up to the upcoming Texas gubernatorial election. Candidate Don Huffines spoke in a very positive tone about Bitcoin and cryptocurrencies and said he will make Bitcoin legal tender in the state if he gets elected. The current governor of Texas, Greg Abbot, also commented on Bitcoin and its mining in particular. He said he believes Bitcoin mining will create jobs and tax revenue and stabilize Texas’s occasionally troubled electrical grid as it acts as an incentive to build more energy infrastructure. The third governor candidate, Allen West, also talked about Bitcoin, believing it to be the greatest technological shift since the invention of the Internet.

There was also news in connection with the third state, as Arkansas is offering $ 10,000 worth of bitcoin as a migration incentive to technology professionals and entrepreneurs moving there. The person must also be over 24 years old, have two years of work experience, and have a permit to work in the U.S.

Cryptocurrency news from the rest of the world

Positive news about Bitcoin was once again heard from El Salvador, which made Bitcoin legal tender in 2021. In January, El Salvador said it plans to offer low-interest Bitcoin-backed loans to the country’s micro and small businesses. Additionally, there was news that the country-developed Bitcoin wallet Chivo has reached more than 4 million users. This also means that about 70 percent of El Salvadorans who have not used banking services in the past have started using Chivo.

South America was also on the headlines when there was Bitcoin-related news about Rio de Janeiro, the capital of one of the world’s largest economies, Brazil. The capital told it plans to invest one percent of the city’s treasury in bitcoin. In addition to this, the city plans to enable the payment of taxes with bitcoin as well as offer a 10 percent discount on taxes when paying with bitcoin.

Progress on cryptocurrencies was also seen in the Middle East, with the Central Bank of Iran and the Minister of Trade and Industry saying they had reached an agreement on the use of cryptocurrencies in international trade. Thus, Iranian companies and other economic operators will soon be able to use cryptocurrencies as a means of payment when trading with foreign operators.

Summary

In January, an exceptional amount of cryptocurrency news appeared about various countries, states, and cities. The U.S. saw competition for cryptocurrencies already in 2021, when Miami, for example, made progress in cryptocurrencies, and mayors of several cities announced that they would take their salaries as bitcoin. Also now, at the beginning of 2022, the same type of competition was observed, when a number of positive and bold comments and suggestions from across the U.S. regarding cryptocurrencies, and Bitcoin in particular.

On the other hand, in Russia, the legal status of cryptocurrencies has long been very unclear, and this was also reflected in the differing views of the central bank and the Minister of Finance, and the President in January on banning the mining and use of cryptocurrencies. It seems that President Putin and many other important decision-makers in Russia are realizing that the risks of standing on the sidelines of cryptocurrencies are too big. This view is well reflected in the statement made by former Russian President Dmitry Medvedev in late January: "The ban on the circulation of cryptocurrencies will leave Russia on the sidelines of the development of one of the fastest growing digital markets at the moment, which will significantly slow down the innovative development of the country."

As discussed before, in addition to the United States and China, positive progress was made in the South and Central America and in the Middle East regards to cryptocurrencies in January. It now appears that China’s bans on the mining and use of cryptocurrencies in the spring and early summer of 2021 were not the beginning of a trend to ban cryptocurrencies. On the contrary, there has been an opposite trend since China's bans, with positive developments around the world showing that the potential of cryptocurrencies and the risks of standing on the sidelines are understood in many countries.

Ville Viitaharju Cryptocurrency specialist
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Last updated: 14.03.2022 13:33
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