Bitcoin and Ether haven’t quite started off the year on a positive note.
After slow declines since Wednesday, the two most popular cryptocurrencies both dropped to three-month lows Friday. The fall comes after an internet shutdown in Kazakhstan amid large-scale protests in the country, which is host to a large number of Bitcoin mining operations, and concerns that the U.S. Federal Reserve may soon tighten monetary policy.
Bitcoin was trading at about $41,000 Friday afternoon, down 4.45% from its Thursday price, according to CoinMarketCap, the lowest levels since September 2021. The second most popular cryptocurrency, Ether, was down nearly 8.5% over the last 24 hours as of Friday afternoon to $3,125, according to CoinMarketCap, its lowest price since late September.
Signs of tightening monetary policy in 2022 caused a slump in the U.S. stock market this week, which extended into the notably volatile crypto market. On Wednesday, the Fed released the minutes for the Federal Open Market Committee meeting that took place on Dec. 14 and 15. They showed that members of the committee, which makes decisions about interest rates and the amount of money in circulation, seemed ready to move away from current interest rates, which are near zero. The Fed first implemented those rates in March 2020 when it lowered the target range for the federal funds rate by one-half of a percentage point, to 1 to 1‑1/4%.
Some participants in the meeting said that the committee should convey a strong stance toward battling elevated inflation, which jumped to 6.8% in November 2020, its highest levels since 1982. Increasing interest rates is one way the Fed can try to lower inflation because it usually causes consumers to spend less and save more.
Adding to the uncertainty in monetary policy is concern about the future of crypto mining in Kazakhstan, which is the second-biggest Bitcoin mining powerhouse, behind the U.S.
After protests erupted in the country on Wednesday, Kazakhstan’s president, Kassym-Jomart Tokayev, declared a state of emergency and reportedly ordered the country’s largest telecom provider to shut down internet access, which shut down cryptocurrency mining as a result.
Other top 10 cryptocurrencies took a hit across the board on Friday. Cryptocurrencies like Solana and Binance Coin were down more than 5% as of Friday afternoon.
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