Bitcoin Slides Below $43,000 — Two Reasons Why
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Bitcoin Slides Below $43,000 — Two Reasons Why

5 months ago

The Fed may increase interest rates even faster than previously thought, and unrest in Kazakhstan is affecting Bitcoin's hash rate.

Bitcoin Slides Below $43,000 — Two Reasons Why

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Bitcoin suffered a nasty pullback on Thursday, with the world's largest cryptocurrency dipping below $43,000 in early trading.

It came after detailed minutes from the latest Federal Reserve meeting indicated that the U.S. will raise interest rates even faster than previously thought.

Although the coronavirus pandemic is continuing to wreak havoc, with the Omicron variant causing infections to spike around the world once again, central banks are especially concerned about high rates of inflation.

The latest figures show that the U.S. Consumer Price Index hit 6.8% in November — the fastest increase seen for 40 years — affecting the public's spending power on everything from groceries to gas.

But the Fed's efforts to tighten monetary supply and end COVID-related stimulus measures could make stocks and cryptocurrencies less attractive as investments.

CoinMarketCap data shows that BTC has tumbled by 7.1% over the past 24 hours — and cryptocurrencies with a smaller market cap, including Ether and Binance Coin, have endured even bigger sell-offs.
Thursday's dip also marks the lowest price that has been seen for 90 days — and although BTC did slip to $43,000 back at the start of December, the digital asset managed to rapidly rebound afterwards.
Some analysts are now bracing themselves for a test of even lower levels, with $40,000 an especially significant zone.

There have been concerns that the correlation between stocks and cryptocurrencies has been growing in recent months.

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Is Kazakhstan a Factor?

Another bearish factor may be linked to the ongoing unrest in Kazakhstan, where there have been violent protests triggered by a sudden increase in energy prices.

Public buildings have been set alight and the entire government has resigned, with the country's president declaring a two-week state of emergency.

Kazakhstan has taken a larger share of Bitcoin's hash rate in the aftermath of China's clampdown — and according to the Cambridge Center for Alternative Finance, it's now the second-biggest country in the world for mining.

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