Double bad hits Bitcoin flash crash 8%

Today (January 6) Bitcoin fell 8%, directly below $43,000, hitting a new low in nearly a month. Ethereum fell from $3,774 to $3,410, the largest drop of 9.64%.

According to Coin, a third-party data service provider, in the past 24 hours, 190,500 people have liquidated their positions in the cryptocurrency market by $769 million. Among them, the Bitcoin liquidation was 198 million US dollars, and the Ethereum liquidation was 156 million US dollars.

In the news, at 3:00 am Beijing time on January 6, the Federal Reserve announced the minutes of the December US Federal Open Market Committee (FOMC) meeting. The Fed may raise interest rates earlier and faster than expected, and the shrinking balance may follow.

At its December meeting, the Fed maintained its existing policy rate while, as expected, doubling the pace of tapering its bond-buying program to $30 billion a month. In terms of the dot plot, which is highly concerned by the market, two-thirds of the committee members believe that at least three interest rate hikes will be made in 2022, and three and two in 2023 and 2024, respectively.

After the minutes of the Fed's meeting in the early morning were released, the capital market quickly gave a pessimistic trend. In addition to the sharp fall in the cryptocurrency market, the three major US stock indexes fell across the board, and the Nasdaq fell 3.34%.

Soaring inflation is forcing central banks to tighten monetary policy, potentially undermining the liquidity push that has boosted many asset prices. The recent volatility in cryptocurrencies comes at a turbulent time for such monetary policy.

On November 10, 2021, the price of Bitcoin climbed to a record high of nearly $69,000 after the U.S. government allowed the listing of a Bitcoin futures ETF.

In addition, cryptocurrencies have recently faced another bad news: Bitcoin mining machines in Kazakhstan have stopped working.

Dissatisfied with the rising fuel prices, Kazakh people have held large-scale anti-government demonstrations in Nur-Sultan, the capital, and Almaty, the largest city. Just stop working.

According to the export statistics released by Cambridge University Business School in October 2021, Kazakhstan ranks second in Bitcoin mining, accounting for 18.1%.

According to data from BTC.com, a Bitcoin computing power data service provider, due to the riots in Kazakhstan and nationwide network shutdowns, the computing power of Bitcoin mining pools such as Antminer Pool, Biyin, Fish Pool, and ViaBTC all plummeted on January 5.

Ouke Cloud Chain Master released the "2021 Annual Data Report" and pointed out that Bitcoin is not a safe-haven asset, but has the attributes of a risk asset. Given the size of Bitcoin’s market capitalization, it is difficult to truly get out of the independent market, and it must be affected by the market’s expectations for the economic environment and the overall sentiment, and Bitcoin’s asset positioning determines this judgment or sentiment. View it.

In 2022, the expected rate hike, the actual rate of rate hike and the trend of the inflation rate will all determine Bitcoin's risk asset attribute and inflation hedge attribute, which has become an industry consensus.