Good morning! ... but not really. Yesterday evening (GMT) bitcoin began falling substantially and we know the drill, when BTC goes down, everything else follows. The price fell pretty sharply, from $46k to $44 in less than an hour, and it began consolidating on its way down and it is currently trading at around $42,900. Honestly, I desperately want it to stop falling (duh) but I get the feeling things may get a bit worse before they get better.
One of the reasons why BTC may have crashed is the number of actively trading wallets has gone down. About a year ago we had 1.2m actively trading wallets and now we've got 971,000, which means there are fewer wallets that are buying and some wallets (may) have been emptied to sell and get out. On top of that, many holders are moving their BTC from cold wallets to hot wallets and/or exchanges, nothing's happened so far but it looks like the preview of a massive sell-off. Or at least that's what the market thinks it is.
The second reason is the Kazakh government has resigned, pretty much overnight (not literally, it didn't happen last night) amid harsh protests, mainly due to rising prices of goods and services, especially fuel. To add fuel to the fire (sorry, pun unintended), the country's main (you might as well call it monopolistic) internet provider, Kazakhtelecom, literally shut down the internet. Why is this relevant? That's because Kazakhstan is the world's second-largest bitcoin miner. The hash rate has gone down by 13.4%, again, pretty much overnight.
The third reason is that even though we tend to think of bitcoin as a hedge against inflation, it actually often follows the pattern of institutional sentiment and tech stocks. The Fed has been sharing bad news for days. First, they admitted that yes, inflation is not going away soon, then they shared a document, which made analyst say, "so is the R-word coming?"
What are you going to do? Sell and buy back again or hang in there and resist?
I've crossposted this article on my blog bitcoinea and Publish0x
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I don´t think those were the reasons. Why is inflation bad for a hedge against inflation?
The no. of wallets being down is rather a consequence of the constant slide of the BTC price rather than its root cause.
And the Kazakh shutdown? It just shows how strong the decentralication of BTC mining is, if no harm at all was done to the network performance if the second largest mining nation stops from one minute to the other - in fact a bullish factor.
I think the main reason is that the market expects a more restrictive monetary policy from FED. Less money printing -> less money available for tech stocks and cryptos.
perhaps you're right
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Thanks for the info on Khazak. Yes it appears bitcoin is correlated to stock market which is dipping in tandem. I sold all my BTC for alts already but they are also dipping as usual. What will it take to trigger the next bull cycle?
ah, I'm afraid the answer is... time and patience. At the end of it's very cyclical
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