Bitcoin price falls below $42,000

It’s difficult to explain cryptocurrency price movements with definite pricision, but the market’s downward slide appears to be tied to the Federal Reserve. To combat rising inflation rates, the Fed may raise interest rates sooner than previously planned, according to minutes from a Federal Reserve meeting.

The prospect of rising borrowing rates impacted most markets, crypto or otherwise. The Nasdaq is down 3.3% since Wednesday, while the Dow Jones Industrial Index dropped just over 1%. Cryptocurrencies are notoriously volatile, so their swings are larger. The Bitcoin Fear and Greed Index, designed to measure market sentiment, is at its lowest level since last July.

Bitcoin price

Two months ago: $61,500

One month ago: $50,100

One week ago: $47,200

Now: $43,200

— The Spectator Index (@spectatorindex) January 6, 2022

Another factor that may be affecting Bitcoin price is ongoing unrest in Khazakstan. Since China cracked down on cryptocurrency mining in 2021, many moved their mining operations south to Khazakstan. More Bitcoin is now mined in Khazakstan than any other, with the sole exception of the US.

Following widespread protests over fuel prices, Khazakstan’s government shut down the internet, causing Bitcoin’s hashrate — a measure of how much computational power is being used to verify transactions and mint new Bitcoin — to fall 13%.

See also