What this may be related to and what Kazakhstan may have to do with reducing the cost of bitcoin – we will tell you in this article.
Decrease in quotes
Today, January 7, the first cryptocurrency has updated its monthly minimum and is at $41 000. As it usually happens, altcoins begin to suffer after bitcoin. For example, Ethereum and Solana are up to $3.3 thousand and $147, respectively.
Two important events happened during the week, due to which such noticeable changes could have occurred in the financial and cryptocurrency markets.
The first event that is now on everyone’s lips is the protests in Kazakhstan. For several days, citizens of the republic have been protesting and demanding a reduction in the price of liquefied gas. In connection with this, the authorities decided to completely turn off the Internet throughout Kazakhstan. After China banned digital assets in the first half of 2021, many large Chinese crypto mining companies moved to Kazakhstan, both due to geographic proximity and the low cost of electricity in the country. Very quickly, Kazakhstan came in second place in the production of the first cryptocurrency in the world, providing about 18% of the world hash rate. After the shutdown of the Internet in Kazakhstan, the hashrate decreased by 12%.
The second event is important macroeconomic news from the United States. The FRS meeting was held in December and, according to the published protocol, the American regulator will raise the interest rate faster and may start doing it earlier. After such news, the stock market reacted with a strong fall, and lately it has been correlated with digital assets.
In addition, one cannot exclude the fact that many investors prefer to withdraw funds from risky deposits, in an unstable situation in the world.
What will happen next
If the situation with Kazakhstan continues to deteriorate, then most likely, many miners will simply start migrating to other countries. At the moment when the Internet was disconnected, many traders from Kazakhstan lost the ability to manage accounts and transactions. This means that traders who traded with leverage were more likely to get liquidated.
Most likely, the situation in Kazakhstan will stabilize, but this will take time and money. According to rough estimates, the protests in the country caused more than $100 million in damage, which will significantly hit the budget of Kazakhstan.
As for the Fed, they gave almost direct confirmation of raising interest rates in 2022, and they will do it several times. Of course, the market reacted negatively, because its participants are accustomed to the receipt of new money, for relatively low interest rates.
In any case, the market has already won back the fall due to the two events that we talked about above, so there is no reason for a further sharp collapse in bitcoin.
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