Bitcoin and cryptocurrency prices have suddenly gone into freefall following a period low volatility since the turn of the year.
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The bitcoin price has lost $3,000 in a matter of hours, dropping from over $47,000 per bitcoin to under $44,000. The bitcoin price is now down almost 40% from its all-time high of almost $70,000 set in November.
Meanwhile, other major coins— including ethereum, Binance’s BNB, solana, cardano and XRP—have also fallen sharply losing between 3% and 5% and wiping billions of dollars of value from the combined crypto market.
Sign up now for the free CryptoCodex—A daily newsletter for the crypto-curious. Helping you understand the world of bitcoin and crypto, every weekdayMORE FROM FORBESWhy A Billionaire Bitcoin And Ethereum Skeptic Suddenly Just Flipped And Made A Wild Crypto Price PredictionBy Billy Bambrough
The bitcoin price has moved sharply lower after trading sideways over the holiday period. The price … [+] of ethereum, Binance’s BNB, solana, cardano and XRP have also suffered a crash.SOPA Images/LightRocket via Getty Images
Cryptocurrency prices fell along with equity markets after the Federal Reserve released the minutes of its December meeting in which officials discussed the possibility of earlier and faster interest rate hikes and shrinking its balance sheet.
“Almost all participants agreed that it would likely be appropriate to initiate balance sheet runoff at some point after the first increase in the target range for the federal funds rate,” according to the meeting summary.
Expectations that the Fed could hike its record-low interest rates and cut its huge Covid-era stimulus measures have weighed on bitcoin, crypto and equity prices across the board in recent months.
“The biggest coins have struggled in their entrance to the new year as trading activity has remained unusually muted since Christmas,” Sam Kopelman, U.K. manager at bitcoin and crypto exchange Luno, said in emailed comments. “Low spot volumes and volatility has meant the market has seen a slow and steady decrease in bitcoin’s price.”
Bitcoin has been moving in tandem with stocks over recent weeks, somewhat losing its reputation as a safe haven asset.
“For the risk-off asset narrative to return, institutional investors must see a decline in bitcoin’s correlation with the S&P 500,” added Kopelman. “Only then will the promise of cryptocurrency as a hedge investment be revived.”
CryptoCodex—A free, daily newsletter for the crypto-curiousMORE FROM FORBES’Huge Surprise’-El Salvador’s President Issued Six Big Bitcoin Predictions As The Price Of Ethereum, BNB, Solana, Cardano And XRP Limp Into 2022By Billy Bambrough
The bitcoin price has fallen sharply, losing over 5% over the last 24 hours, with ethereum, BNB, … [+] solana, cardano and XRP, also dropping around 5%.Coinbase
The latest crypto price crash comes after much of the internet was shut down in Kazakhstan, now a major bitcoin, ethereum and cryptocurrency mining hub due to China’s expulsion of miners through 2021. Crypto miners use powerful computers to secure cryptocurrency blockchains and validate transactions in return for freshly minted coins.
Earlier today, Coindesk reported crypto mining in Kazakhstan “is likely to be hurt” due to the country’s largest internet service provider shutting down access to the internet in response to protesters storming government buildings over sky-high energy costs.
“I guess some geeks would say that in theory you could mine without internet, but in practice, all the machines in Kazakhstan should be turned off because of the internet shutdown,” Jaran Mellerud, a researcher at Arcane Research, told CoinDesk.