Kazakhstan: Nationwide blackout sparks global Bitcoin crash
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In recent years, Bitcoin has grown in popularity around the world, with investors looking to take advantage of the new-age digital currency. The price of the tender is affected by its level of supplier demand amongst other factors and thus, is subject to variations in its overall value. In the past week Bitcoin has suffered its worst price slump for nearly four years – so what’s led to this development?
Currently, Bitcoin is experiencing its worst drop in price since August 2018, having lost nearly 40 percent of its value in just two months.
Coindesk – a news site specialising in Bitcoin and digital currencies – noted that the cryptocurrency fell in price for seven days in a row over the last week.
The news comes two months after Bitcoin hit an all-time high above $68,000 (£50,240).
Now, experts are warning that a sharper sell-off could be triggered if Bitcoin falls below $40,000 (£29,550). At the time of writing, it was trading at just below $41,000 (£30,290).
A significant price correction following all-time high prices is typical for cryptocurrencies, as investors siphon off profits from their holdings.
However, the extent and severity of the latest losses could finally signal an end to the 2020/21 “bull run”.
Bull runs or bull markets in cryptocurrency are defined as markets experiencing sustained and/or substantial growth.
Furthermore, the recent clump in value could end hopes of Bitcoin reaching six figures in 2022.
Crypto analyst Marcus Sotiriou, from the digital asset broker GlobalBlock, said $40,000 remains a “key level of support” for Bitcoin, having proved its importance throughout 2021.
September 2021 was the last time Bitcoin fell to this level when it bounced back strongly from the $40,000 level.
He told The Independent: “Even though it has had a weak reaction so far, I expect upside in the short term, due to the interaction with such a significant level.”
Mr Sotiriou added a number of factors are indicating a “relief rally” – a respite from a broader market sell-off that results in temporarily higher securities prices – in the short term.
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The “Crypto Fear and Greed Index” is one of these factors, which analyses online search trends, social media and exchange data to measure overall market sentiment.
The popular index is currently registering “extreme fear”, the lowest level since the crypto market bottomed in July last year.
Overall, it’s believed the market slump has been driven by the broader economic climate, which has seen global stock markets decline at the start of the year.
An expected hike in rates by the US Federal Reserve is also being blamed, which could see investors move funds out of riskier assets.
What is Bitcoin?
Bitcoin is a decentralised digital currency, which unlike other currencies, doesn’t have a central bank or single administrator.
The tender was released in 2009, although it’s never been confirmed who it was created by. Instead, its origins are owed to an unknown person or group of people using the name Satoshi Nakamoto.
In September 2021, El Salvador officially adopted Bitcoin as legal tender, becoming the first nation in the world to do so.
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