Bitcoin price falls below $42,000 as Fed hints at interest hike

Bitcoin, ether and the entire cryptocurrency market are down, likely due to news that the Federal Reserve may raise interest rates earlier than expected.

Daniel Van Boom Senior Writer
Daniel Van Boom is an award-winning Senior Writer based in Sydney, Australia. Daniel Van Boom covers cryptocurrency, NFTs, culture and global issues. When not writing, Daniel Van Boom practices Brazilian Jiu-Jitsu, reads as much as he can, and speaks about himself in the third person.
Expertise Cryptocurrency | Culture | International News
Daniel Van Boom
2 min read
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Bitcoin's voyage to the moon has once again encountered turbulence. The cryptocurrency on Friday morning fell below $42,000 for the first time since late September. It has dropped over 12% in the past seven days, one of many cryptocurrencies to have tumbled in recent days. Ether, which held at around $4,000 for much of December, briefly dipped below $3,200 on Friday morning.

What gives? 

It's difficult to explain cryptocurrency price movements with definite precision, but the market's downward slide appears to be tied to the Federal Reserve. To combat rising inflation rates, the Fed may raise interest rates sooner than previously planned, according to minutes from a Federal Reserve meeting

The prospect of a rise in borrowing rates impacted most markets, crypto or otherwise. The Nasdaq is down 3.3% since Wednesday, while the Dow Jones Industrial Index dropped just over 1%. Cryptocurrencies are notoriously volatile, so their swings are larger. The Bitcoin Fear and Greed Index, designed to measure market sentiment, is at its lowest level since last July

Another factor that may be affecting bitcoin's price is ongoing unrest in Khazakstan. Since China cracked down on cryptocurrency mining in 2021, many moved their mining operations south to Khazakstan. More bitcoin is now mined in Khazakstan than any other country, with the sole exception of the US. 

Following widespread protests over fuel prices, Khazakstan's government shut down the internet, causing bitcoin's hashrate -- a measure of how much computational power is being used to verify transactions and mint new bitcoin -- to fall 13%.