The value of bitcoin has been down since the beginning of December. The downfall of prices explained on the profit revolution website before New Year that many wanted to realize profits before the end of the calendar year for tax reasons.
But the declines have continued, and the latest sharp fall came after the first week of January 2022, when meeting notes from the US Federal Reserve were published. There was inflation unrest among members and discussions about earlier interest rate increases, which affected both shares and cryptocurrencies.
The meeting minutes showed that the Fed members were still worried about the high inflation and flagged for early interest rate increases. This release has reduced investors’ risk appetite, with broad stock market falls as a result. On Thursday, significant price declines in high-risk assets such as cryptocurrencies can also be noted.
Race for Bitcoin and Etherium:
The minutes of the meeting from the US Federal Reserve created a significant impact on the prices of cryptos. Sharp price declines can also be noted in bitcoin and other cryptocurrencies. According to the site “Coindesk “, The largest cryptocurrencies, Bitcoin, and Ethereum fall just over 8 and 11 percent, respectively. A bitcoin now costs about 42,900 dollars, while the value of etherium amounts to around 3,380 dollars on Thursday morning.
Price movements in the crypto market have become increasingly in line with the traditional stock markets as the number of institutional investors trading in assets has increased, reports Reuters.
“It was quite expected,” says Sami Rusani, a Swedish investor in the crypto sector through the Go Blockchain fund. Moreover, some experts think that bitcoin prices might be following a pattern. “It also happened at the end of last year and this summer in response to the ‘Fed’ talking about ending stimuli earlier than expected and raising interest rates.”
Bitcoin was traded for just over 41,000 dollars during the night towards Friday Swedish time, 10 percent lower than on Wednesday. The listing is the lowest since September and is 40 percent below the peak listing from November, 68,990 dollars. Sami Rusani also blames bot trading for the often sharp falls in bitcoin with other cryptocurrencies directly.
“When bitcoin falls, it often falls sharply. It is an ongoing game between institutional investors, bots, and private savers. The bots (robot trading ends note) trigger each other to sell, making private individuals worried and selling. “At the macro level, he says there is no direct concern about bitcoin. “If you look hour by hour, it looks awful, but the intelligent individual is buying now, and the same people sold when it is high.
The fact that cryptocurrencies are falling in line with the stock market is no longer something that crypto advocates complain about, even though bitcoin was seen as a safer alternative to the “crazy stock market”. Nowadays, it is accepted that crypto goes along with the rest of the market worldwide.
And then the message from the Federal Reserve is very influential. “Quantitative easing is seen as the most negative message from the Federal Reserve, as it is the opposite of the aggressive easing that triggers a ‘buy it all’ behavior, which happens every time the Fed lowers interest rates,” said Brent Donnelly, chief executive of Spectra Markets.
Short-term volatility is not over yet. For example, new US employment figures released on Friday also had a direct negative effect, which is why several experts have stated that the case may continue in the American media. At the same time, the crypto world is also following developments in Kazakhstan, where protests have been answered with deadly force, and the internet has been shut down.
In August this year, Kazakhstan accounted for 18 percent of the world’s bitcoin mining, the second largest after the United States, which then accounted for 35 percent, according to figures from the Cambridge Centre for Alternative Finance.
“Many people moved there from China when they banned bitcoin mining. As a result, 10-15 percent of all hashing (‘registrations’ in the blockchain) takes place in Kazakhstan “, says Sami Rusani and explains that it also affects the level of unrest.
