Bitcoin prices have fallen to their lowest level in months following remarks from the US Federal Reserves. The crypto-currency dropped in value from $47,000 (£34,700) earlier this week to less than $42,000 (£31,000) per digital coin. It follows minutes from a meeting of the Federal Reserve, which suggested it may raise interest rates.
Political events in Kazakhstan have also raised concerns about the network’s capacity. Because of its global and decentralized nature, attributing a rise or fall in the price of Bitcoin to a single cause is difficult. But many commentators have pointed to the release of the Federal Reserve’s December meeting notes as one factor.
The central Asian country accounts for 18% of the Bitcoin network’s processing power, according to the Cambridge Centre for Alternative Finance. Many crypto miners fled China for neighboring Kazakhstan over Beijing’s ban on virtual currency mining.
Kazakhstan’s internet shutdown took as much as 15% of the network offline, according to some estimates. Bitcoin’s computing power “is not directly correlated to the price of Bitcoin, but it gives an indication of the network’s security, so a fall can spook investors in the short term,” Marcus Sotiriou, an analyst at the U.K. based digital asset broker GlobalBloack, said in a note Thursday.
The massive Central Asian country has been hit with political unrest this week, as citizens took to the streets to protest against rising fuel prices. Fatal violence followed as demonstrators – which the country’s leaders paint as “rioters” – seized buildings in the capital city, Almaty.
Matthew Dibb from Singapore-based crypto company Stack Funds told Reuters news agency: “We are seeing broad risk-off sentiment across all markets currently, as inflationary concerns and rate hikes appear to be at the forefront of speculators’ minds.”
He also warned that “there is a risk of a retreated back to the mid-30s on the short term”. Crypto-currencies, and particularly Bitcoin, continue to face criticism. The hawkish comments triggered a sell-off in global stock markets which spilled over into cryptocurrencies. Bitcoin bulls often describe it as an asset that is uncorrelated to the traditional financial market; however, experts have noticed growing parallels in the price movement of bitcoin and stocks. Other digital currencies continued to slide Friday with ethereum shedding 2.3% and Solana falling 4.7%.
The minimum suggest that America’s central bank might raise interest rates sooner than some had anticipated, and sell off some of its assets. That could have led to a knock-on effect of traditional investors who hold Bitcoin, as they pursue less risky assets instead.
At the same time, a huge amount of the world’s Bitcoin mining – the process by which transactions are verified and new “coins” made – takes place in Kazakhstan. The massive Central Asian country has been hit with political unrest this week, as citizens took to the streets to protest against rising fuel prices. Fatal violence followed as stated – which the country’s leaders paint as “rioters” – seized buildings in the capital city, Almaty.
To conclude, it made suffer many people suffer and their value got decreased due to the rate that has come down.