Bitcoin price has dropped to a daily low of $42,412 on the Bitstamp exchange, marking a 7.5% daily drop. BTC is struggling to recover, currently trading at $42,967.
BTC/USD 4-hour chart | Source: TradingView
Key reasons why Bitcoin price just tanked to $42,000
As AZCoin News reported, the market turmoil that came minutes after the December meeting of the US Federal Reserve, published on Wednesday, suggests the central bank could raise interest rates as soon as possible. this March. The news sent US stocks plummeting. The tech-focused Nasdaq Composite Index, known for its strong correlation with Bitcoin, fell 3.34% to close at 15,100. Shares of Nvidia, AMD, and Adobe fell more than 5%. The Dow Jones Industrial Average and S&P 500 also closed in the red.
Bitcoin is also facing another headwind in the crypto mining sector as a wave of protests broke out in Kazakhstan, the second-largest Bitcoin mining hub. A comparison of mining pool hash rates from half a day ago — preceding the broader internet crackdown, as reported by multiple news outlets— and now indicates a decline in rates for numerous mining pools. The most significantly impacted are 1THash (82% decline), OKExPool (46.3% decline) and KuCoinPool (22.7% decline).
The situation is notable given that Kazakhstan is home to as much as 18% of the world’s bitcoin hashrate, as estimated last fall by the Cambridge Centre for Alternative Finance. Major pools including F2Pool, AntPool, and ViaBTC also saw declines, of 12.8%, 11.6%, and 19.2%, respectively.
Source: BTC.com
According to data provided by Coinwarz, the network’s hashrate has now dropped to 165 EH/s after peaking at 229 EH/s on Jan.
Mark Newton, managing director of Fundstrat Global Advisors, noted that $45,655 is a critical support level for Bitcoin. Now that it has been breached, the leading cryptocurrency appears to be on track to drop below $40,000 for the first time since September 2021.
“FUNDSTRAT: “I had highlighted $45,655 as being important. This was violated on Tuesday, which in my view makes prices vulnerable to a decline down to test September 2021 lows near $39,573. This looks to be the first real support”, Carl Quintanilla tweeted.
Source: Carl Quintanilla
In another development, Ryan Selkis, the founder of crypto data firm Messari, says that BTC is a “contrarian bet” for 2022 — meaning that performance-wise, the asset could come as a rank outsider on a turf it has long dominated.
While some experts forecast that the price of BTC will hit $100,000 this year due to increased institutional adoption, Ryan Selkis was silent on price. However, the trend suggests a continuation of bitcoin’s declining market share in dominance terms in 2022, perhaps to as low as 10%, as one analyst predicted.
Bitcoin’s market value relative to altcoins — basically any other crypto asset which is not BTC — is now 39.3%, its lowest since June of 2018. It has also struggled to handle increased transaction volumes, leading to the emergency of other blockchain networks that could do so. As the newer networks grow, Bitcoin risks losing more if maxis fail to embrace change.
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