The Fed releases a hawkish signal, superimposing the turmoil in Kazakhstan, and Bitcoin crashes by 8%

Today (January 6) Bitcoin plunged 8%, directly below $43,000, a new low in nearly a month. Ethereum fell from US$3,774 to US$3410, with a maximum drop of 9.64%.

According to the third-party data service provider coin, 190,500 people in the cryptocurrency market have lost 769 million U.S. dollars in the past 24 hours. Among them, Bitcoin liquidated US$198 million and Ethereum liquidated US$156 million.

On the news, the Federal Reserve announced the minutes of the December Federal Open Market Committee (FOMC) meeting at 3 a.m. Beijing time on January 6.

At the December meeting, the Fed maintained its current policy interest rate, while doubling the rate at which it cuts its bond purchase program to $30 billion per month, as expected. Regarding the dot plot, which is highly concerned by the market, two-thirds of the committee members believe that interest rates will be raised at least three times in 2022, and that interest rates will be raised three times and two times in 2023 and 2024, respectively.

After the announcement of the minutes of the Fed's meeting in the early morning, the capital market quickly showed a pessimistic trend. In addition to the sharp drop in the cryptocurrency market, the three major U.S. stock indexes fell across the board, with the Nasdaq losing 3.34%.

Rising inflation is forcing central banks to tighten monetary policy, which may weaken the driving force brought by liquidity, which has boosted the prices of many assets. The recent volatility of cryptocurrencies coincides with this turbulent period of monetary policy.

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

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

Dissatisfied with the increase in fuel prices, the people of Kazakhstan have held large-scale anti-government demonstrations in the capital, Nur-Sultan and the largest city, Almaty. Kazakhstan has entered a state of emergency, the country’s Internet has been severely disrupted, and mining machines have been severely disrupted. Can only 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 Bitcoin computing power data service provider BTC.com, due to the riots in Kazakhstan and the nationwide network disconnection, the computing power of Bitcoin mining pools such as Ant Pool, Biyin, Yuchi, and ViaBTC all dropped sharply 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 risky asset. Given the size of Bitcoin's market value, it is difficult to truly go out of the independent market, and it will definitely be affected by the market's expectations of the economic environment and overall sentiment. Bitcoin's asset positioning determines this judgment or sentiment's perception of it.

In 2022, the expected interest rate hike, the actual rate of interest rate hike and the trend of the inflation rate will all determine Bitcoin's risk asset attributes and inflation-hedging attributes have become industry consensus.