Cryptocurrencies suffered a major double blow last week from the Federal Reserve’s increased willingness to raise interest rates and the political crisis in Kazakhstan, which led to a halt in cryptocurrency mining operations there.
This is a result of a general tendency of investors to give up riskier investments, given that the U.S. Federal Reserve has quickly shown its willingness to increase interest rates and sell debt securities.
Bitcoin fell sharply during the week after starting the new year at around $47,000. On Wednesday, the price of the world’s largest cryptocurrency crashed following news from the Fed and sent the trading range below $43,000, the lowest level since the end of September 2021. Currently, Bitcoin is trading below $42,000, with no sign of recovery so far.
At the same time, Ether experienced a similar crash, reaching below $3,000 on the eToro platform on Saturday. The cryptocurrency had started the week at over $3,800, but is now trading below $3,200.
The crisis in Kazakhstan halts bitcoin mining
Bitcoin has slowed down after power outages cut Kazakhstan’s crypto mining industry, says Simon Peters, an analyst at eToro’s crypto asset investment platform.
“The ongoing political crisis, which has led to riots and tensions in the capital, has had an involuntary impact on Bitcoin. With power outages in the country, major crypto mining operations were forced to shut down, leading to a decrease in cryptocurrency hashrate (i.e. cryptocurrency creation rate), overall network computing power and a decrease in the value of BTC tokens,” said Peters.
Kazakhstan has quietly become a world leader in Bitcoin mining, with its production second only to the United States, following China’s recent crackdown on mining operations.
“As long as the situation remains unclear in this country, ongoing tensions will continue to have a potential impact on the hashrate and the global price,” says the analyst.
