Bitcoin investors were reminded once again about the volatility of the cryptocurrency market. The currency’s value dipped to its lowest point in a while due to the chaos in Kazakhstan and the shutdown of its second-largest hub. Bitcoin was trading below $42000 for the first time since September 2021, a decline of more than 12% in a week. Other cryptocurrencies like Ethereum also dropped in value to below $3200.
While all cryptocurrencies are struggling due to factors like Omicron and interest rates, Bitcoin’s price dip can be attributed to the deadly protest in Kazakhstan due to fuel shortages. The request for Russian paratroopers by President Tokayev and the stoppage of internet services are part of the reason. This situation is also due to a ban in China on cryptocurrency mining. The Chinese government may have wanted to promote its own currency – the digital yuan. Many miners moved their base to Kazakhstan, only to face more uncertainty due to political issues.
The Chinese crackdown on cryptocurrency mining has effectively wiped out $400 billion of value in a matter of days. China’s Sichuan province has the highest number of crypto miners, and they have been ordered to shut down operations. The People’s Bank of China has also asked payments services companies and financial institutions to stop providing cryptocurrency-related services. This includes the opening of accounts, clearing and settling transactions. Even though these rules have been around for a while, it indicates more pressure on institutions with regard to cryptocurrency transactions.