The prices of the digital currency Bitcoin have fallen to their lowest level in months following the release of notes from the U.S. Federal Reserve. The value of the currency dropped from $47,000 to $42,000 per digital unit. This came after the publication of the minutes of a central bank meeting that indicated a potential increase in bank interest rates. Meanwhile, the current political events in Kazakhstan have raised concerns about network capacity.
The fluctuations in the value of the digital currency cannot be attributed to a single factor due to its decentralized global nature; however, many commentators linked the current decline to the release of the U.S. Federal Reserve meeting notes from December. The meeting minutes discussed the possibility that the U.S. central bank might raise interest rates sooner than expected and consider selling some of its deposits, which may have inflicted shock among traditional investors trading in digital currencies, as they typically prefer less risky investments.
At the same time, a significant portion of digital currencies is mined in Kazakhstan, a process that confirms ownership of the digital currency and mints "coins." The country located in Central Asia has witnessed political unrest this week, with citizens taking to the streets to protest fuel price hikes, resulting in violent events that have led to several fatalities as some protesters seized buildings in the capital city, Almaty. Kazakhstan is believed to account for 18% of Bitcoin mining due to the relatively low cost of electricity. The internet service disruption earlier this week negatively impacted the overall Bitcoin mining process on the network.
This is the lowest value Bitcoin has reached since September 2020, having peaked at $60,000 in November of last year. Other digital currencies have also experienced value declines, with Ethereum dropping over 4% within 24 hours from approximately $3,800 to $3,200. Matthew Deep from the Singapore-based company "Stack Funds" told Reuters, "We are currently witnessing risk concerns across all markets, dominated by fears of inflation and the possibility of a significant increase in value in the minds of speculators." Deep warned of the risk of the currency's price potentially retreating to "the mid-thirties in the short term."
Digital currencies, particularly Bitcoin, continue to face criticism. The Mozilla Foundation, which designs the Firefox web browser, announced it would no longer accept donations in digital currencies after user opposition. The foundation had accepted digital currencies from donors for years, but a recent tweet reminding people of this sparked angry reactions as many criticize the high energy consumption of the currency and its lack of regulatory oversight.
