Bitcoin prices have plunged to their lowest level in months as a result of statements from the US Federal Reserve.
The value of the digital coin has dropped from $47,000 (£34,700) earlier this week to under $42,000 (£31,000). It comes after minutes from a Federal Reserve meeting that revealed the central bank was considering raising interest rates. As a result of recent political changes in Kazakhstan, concerns about the network’s capacity have been highlighted.
Due to Bitcoin’s global and decentralized nature, it’s impossible to ascribe a price increase or decrease to a single reason. The release of the Federal Reserve’s December meeting notes, however, has been cited by numerous experts as one explanation.
The Federal Reserve of the United States may hike interest rates sooner than expected and sell some of its assets, according to the minutes.
This might have had a knock-on effect, leading to regular investors abandoning Bitcoin in favor of less risky assets. At the same time, Kazakhstan hosts a significant portion of the world’s Bitcoin mining – the mechanism by which transactions are confirmed and new “coins” are created. Kazakhstan accounts for 18 percent of the Bitcoin network’s hash activity, experienced a statewide Internet outage, causing BTC’s hash rate to decrease by 13.4 percent and its value to plummet.
This week, political upheaval erupted in the vast Central Asian country, as citizens flocked to the streets to protest rising fuel costs. Officials labeled demonstrators “rioters” after they seized buildings in Almaty, the country’s largest city, resulting in fatalities.
Kazakhstan is expected to handle nearly a fifth of all Bitcoin “mining,” as the process is known, thanks to its typically low electricity costs. A recent internet outage seems to have damaged the processing power of the whole Bitcoin network.
The value of other crypto-currencies has also dropped. Ethereum’s price dropped from around $3,800 on Wednesday to a little under $3,200 on Friday.
“We’re seeing broad risk-off sentiment across all markets today,” Stack Funds’ Matthew Dibb told Reuters, “as inflationary concerns and rate hikes appear to be at the forefront of speculators’ minds.”
“In the short term, there is a risk of a fall back to the mid-30s,” he added.
Cryptocurrencies, particularly Bitcoin, continue to be punished.
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