
Monday the 10th of January was the day when Bitcoin fell to a three-month low. This actively continues a slide that began a week before that. The Federal Reserve caused a massive sell-off because of their cautious stance during the pandemic. Their claims included a fact that the FR might act faster than expected when it comes to reversing policy in order to help the economy during these troubled times. A lot of crypto experts claim that this crypto drawback could last longer than anticipated. It may even become worse is the central bank’s stance becomes more aggressive. However, there is much more to this downfall and the Federal Reserve stance is just the tip of the ice-berg. Many believe that fears over US interest rate hikes and the situation in Kazakhstan which is a country’s which holds a considerable mining operation appear to be the forces driving the dip.

Furthermore, Bitcoin wasn’t the only coin that has been affected over the last three weeks. Other popular crypto assets like Ethereum, Binance Coin, SOL, and others have hit record lows as well. It seems the US pandemic stance is affecting all of them; however, the situation in Kazakhstan might have made a bigger impact. Crypto mining operations in Kazakhstan, which have proliferated since China outlawed cryptocurrency mining in the country, went down in a nationwide internet outage about two weeks ago. The country is in a middle of a political turmoil. The Kazakh government’s made a decision to allow market rates govern fuel prices in the country. This caused the price of LPG double in price which made people take to the streets and riot. The situation has calmed a bit since then but it seems crypto prices will stay down for a while more.
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All of this is why crypto prices have been fluctuating recently. On top of that, the fluctuations have all been in an downwards direction. In this article, we will explain exactly what’s going on and why the prices are dropping. For more information, make sure you check the Coinbet24 blog. Our blog is listed among the best cryptocurrency based blogs at Top 20 Bitcoin Gambling & Betting Blogs.
The Last Time Something Similar Happened
In June, the Chinese Government closed considerable crypto mining operations taking place in the Sichuan province. They also demanded that Chinese banks and payment channels stop supporting decentralized and anonymous crypto transactions. The news hit the cryptocurrency market really hard and crypto prices plummeted. Bitcoin dropped below $30,000 for a while which was a shock for Bitcoin investors. The cryptocurrency then continued to vary as other global administrations and regulators mull legislation to curb increased crypto activity. Following the Chinese state’s move, countries like South Korea also pledged to tackle the rise in money laundering taking place via cryptocurrency. Furthermore, the Metropolitan Police announced that it had successfully closed in on a huge UK cryptocurrency money-laundering operation.
These new regulations hit crypto exchange platforms like Binance the hardest. Putting all of this together gives us a full picture of why Bitcoin’s price dropped like a hot potato. It was at $60,000 at the beginning of June but just two weeks later, the price got sliced in half. However, things moved in a positive direction when Tesla CEO Elon Musk made an appearance at a major Bitcoin conference in July. His claims that Tesla will most likely accept Bitcoin once again caused the crypto market to grow once again. Still, the market will need something more if Bitcoin is to return to a price between $60,000 and $70,000. Some experts believe that Bitcoin’s price might go all the way up to $100,000 by the end of the year. However, that seems highly unlikely, at least at the moment.
The Situation Right Now
The cryptocurrency market lost momentum once again on Wednesday. The value of top virtual coins went down even further due to global uncertainty amid rising inflation and the ongoing Covid-19 situation. Bitcoin, the world’s most popular cryptocurrency, traded at $41,761.80 or 1.22 per cent lower than its value 24 hours ago at 12:10 pm. Bitcoin’s market capitalization fell below $800 billion and the 24-hour trade volume remained steady at $900 million.
Ethereum, as the second-most popular cryptocurrency, also dropped in value over the past 24 hours. It’s trading just above $3,100 or 2.80 per cent lower at the time we are writing this article. Ethereum’s popular cryptocurrency’s market capitalization fell to $356 billion. It’s also important to note that the 24-hour trade volume was $734.10 million. The situation is the same for most other smaller cryptocurrencies. They all took a hit due to the weak momentum seen across the virtual coin markets all around the globe. Market watchers have asked crypto investors to proceed with caution as the situation remains volatile.
Commenting on the current trend in the cryptocurrency market, Edul Patel, the CEO and Co-founder of Mudrex, had a few words to share with the public:
“The global crypto market cap dipped by 1 per cent, while the market volume has increased by 1 per cent in the past 24 hours. Bitcoin and Ethereum continued to trade below $42,000 and $3,400. BTC’s price has steadily declined since reaching its all-time highs of $69,000 on November 10. Large crypto investors seem to be accumulating BTC amid flat price action. The other cryptocurrencies are also experiencing a similar dip. Cardano, which outperformed BTC and ETH, has also been down by 7 per cent. Meanwhile, Stacks picked up nearly 13 per cent, ETC and THETA increased by 7 per cent.”
What’s Next for the Crypto Market?
Market sentiment towards FED monetary policy has certainly contributed to the reversal. Regulatory chatter and activity have also been crypto market negative at the turn of the year, however. Late last year, the Bank of England raised concerns over the crypto market and financial stability. The BoE also called for a global crypto regulatory framework. Earlier this year, the IMF raised similar concerns. Just this week, India’s Prime Minister Modi also called for a unified approach to cryptos at DAVOS 2022.
With cryptos back in focus, crypto mining has also drawn plenty of attention in recent weeks. Last summer, China banned Bitcoin mining as part of its goal to be carbon neutral by 2060. As a result of the ban, Bitcoin miners relocated to other crypto mining friendly nations that included the U.S and Kazakhstan.
EU Striking at Crypto Miners
This week, world leaders are attending virtual DAVOS 2022. Among the top 10 global risks over the next 10-years are climate action failure, extreme weather, human environmental damage, and natural resource crisis. Environmental activists and governments could argue that cryptos and crypto mining could contribute to all of these and possible more. With plenty of focus on mining, the EU has also stepped forward, calling for a ban of Proof-of-Work (PoW) mining.
News hit the wires overnight of European Securities and Markets Authority (ESMA) vice-chair Erik Thedeen calling for the ban on PoW mining. The vice-chair reportedly spoke of the significant risks that PoW mining poses to the environment. He reportedly added that EU regulators should encourage the Proof-of-Stake protocol as it has “a significantly lower energy profile”. Both Bitcoin and Ethereum (ETH) are currently PoW networks, though Ethereum 2.0 will be a shift to a PoS protocol.
These news will surely keep all crypto prices volatile in the next couple of weeks. Bitcoin has rallied a bit at the moment and is currently trading at $42,000. However, without major players joining the crypto scene, prices will continue to drop. Bitcoin and all the other coins needs some positive news to go their way if they want 2022 to be a successful year for crypto investors and enthusiasts.