The drop in Bitcoin from January 5 to 7 has been wrongly linked to the shutdown of mining farms in Kazakhstan due to the internet outage. Arcane Research analysts share that view.
“Because of the protests in this country the bitcoin hashrate fell by 12%, but it would be wrong to view the price drop to the lows since September last year as caused solely by that. There were other bearish news in those days,”, the experts noted.
Analysts reminded that on the evening of January 5 the Fed released the minutes of its last meeting with clearer signals of tighter monetary policy.
The committee did not rule out shrinking the balance-sheet assets almost immediately after the first rate hike. The pace would be faster than in October 2017, when the regulator also unwound the программу количественного смягчения.
Bitcoin fell 4.5% in the first hour after the minutes were published, while the S&P 500 declined by 1%. Noting such dynamics, Arcane Research explained that it was the Fed news, not the Kazakhstan shutdown, that drove the sharp decline in the crypto markets.
Experts stressed that, in recent months, Bitcoin’s correlation with equities has risen, most visibly at times of tightening monetary policy signals.
Analysts called the market reaction to the Kazakhstan internet outage “a simple coincidence”.
Economist Alex Krüger warned that Bitcoin could fall below $40,000 in a high-inflation environment.
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