FED Sinks Stocks And Crypto, Kazakhstan Collapse Drops Hash Rate

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Last Updated on 6 January 2022 by CryptoTips.eu

Jeroen Kok

Jeroen is one of the lead copywriters on Cryptotips.eu and discusses all recent events in the crypto market. This includes news updates, but also price analyzes and more. He developed his passion for cryptocurrency during the bull run in 2017. He has learned a lot since then. The combination of cryptocurrency and creative writing is perfect for Jeroen and an excellent way to share his knowledge with a wide audience. Find me on LinkedIn / [email protected]
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One day after this site pointed to the fact that the natural enemy of Bitcoin, central banks, would have a great say in its price in 2022, Federal Reserve Chairman Jerome Powell did as we predicted and pointed to a possible interest rate hike in March of this year already, a lot sooner than most investors expected.

As a result, stock markets in the US ended the day sharply down and crypto markets soon followed suit. The mass protests against the rulers of Kazakhstan also didn’t help Bitcoin. We explain.

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Bitcoin dominance slides

At the time of writing, Bitcoin is trading around $43k, having lost some 8% in the past week, while Ethereum is down 10% on the day, as a result of the news.

Interesting to see was that the bitcoin dominance ratio, which tells us how much is Bitcoin’s market capitalization relative to the total crypto market capitalization, continued to decline towards a very low number of 39% on Wednesday.

Analysts predicted that other crypto investments of major companies (like in Ethereum or Cardano) would pull down the Bitcoin dominance ratio in 2022, but it is proving to happen sooner than expected.

Nasdaq drops

Over in the US, markets reacted sharply to the news of the Fed possibly raising interest rates sooner than predicted.

The Dow Jones Industrial Average closed down 392 points or 1% while the S&P 500 dropped 1.9%. However, the biggest decline was for the tech-rich Nasdaq Composite which saw a 3.3% pullback, as Wall Street continued to rotate out of technology investments.

Kazakhstan revolution drops hash rate

A story which might have slipped the cracks in Western newscasts this week is the fact that the Asian nation of Kazakhstan saw mass protests against it’s government which have resulted in a full-on revolution.

The country became the second biggest Bitcoin mining producer in the past year, and the events therefore had an immediate impact on Bitcoin’s hash rate.

President Kassym-Jomart Tokayev fired his government in response to the protests and declared a state of emergency. Furthermore, internet access in the country was shut down for several hours with no apparent idea as to when it will be turned back on again. This also means that Bitcoin miners in Kazakhstan can’t communicate with the Bitcoin network.

Research site The Block tweeted that a full 12% of Bitcoin’s worldwide computational power had vanished, causing Bitcoin’s hash rate to drop significantly.