The price of bitcoin fell below $40,000 in early January as protests and unrest broke out in Kazakhstan, one of the world’s three most important virtual currency mining nations.
In a report published in the Russian newspaper Gazeta, author Uxana Ryshtova noted that the price of Bitcoin rose slightly on January 11, trading within $41,700.
Several experts believe that the political crisis in Kazakhstan played a major role in this decline, as the country accounts for around 18% of global bitcoin mining, however, there are other factors that have contributed to this decline. The price of the world’s top-ranked digital currency fell.
Why is the price of Bitcoin falling?
Artem Dave, chief analyst at “A Markets”, believes that the price decline of bitcoin and other cryptocurrencies at the end of last year was mainly due to the new measures taken against the stock market.
Dave emphasized that the annual inflation rate in the United States has risen to 6.2%, reaching a record level not seen in the United States for more than 30 years. It is now possible to judge that the Federal Reserve is about to tighten monetary policy by raising interest rates.
Dave went on to say that the returns of investing in stocks, currencies and all risky assets, including cryptocurrencies, will automatically decline as interest rates rise, so in the last phase, investors have chosen to avoid buying Bitcoin, Ethereum and other digital currencies.
According to Dave, developments in Kazakhstan have also had a negative impact on the price of Bitcoin.
Sergey Billy Hood, a financial analyst from the financial company “Finam”, said that after the Chinese authorities put pressure on the mining activities of digital currencies, there was a large exodus of practitioners in the field, thus making the scale of mining in Kazakhstan. Significant developments have occurred.
Billy Hood added that Kazakhstan, which has become the world’s third-largest cryptocurrency mining nation, has seen a 13 percent drop in the total computing power of its mining rigs due to internet shutdowns following escalating anti-government protests.
But crypto-asset market expert Alan Chomsky believes that the events in Kazakhstan did not affect the cryptocurrency market, stressing that the decline in the prices of these currencies is only due to the level of supply and demand.
Bitcoin’s value reached its highest level in November last year and crossed the $68,000 threshold. As demand declines, Chomsky expects bitcoin to fall below $30,000 in value.
What will Bitcoin experience in 2022?
Dave believes that in the coming period, the price increase of Bitcoin and other cryptocurrencies will be related to the stability of the global economy and the reduction of interest rates by central banks, as these situations will attract investors to invest in risky assets.
Dave added, “Given that this year will see massive interest rate hikes by banks around the world, it is unlikely that cryptocurrencies will see any price appreciation before investors return strongly to cryptocurrencies in the second half of 2022. That’s what could happen if the deal is between $20,000 and $30,000.”
Dave continued, “The lower value of the asset will attract many people to invest in cryptocurrencies, driving the price higher at a later stage.”
On the other hand, Billy Hood believes that the U.S. stock market has put a lot of pressure on cryptocurrencies, especially Bitcoin, recently. In a worst-case scenario, its price is believed to reach $36,000.
According to Chomsky, the sooner Bitcoin’s price falls to $30,000, the more likely it is to quickly rebound to past highs, which could happen in the second half of 2022.