Why did the cryptocurrency market crash?

Experts identify two key factors that led to the collapse of Bitcoin and other cryptocurrencies.

Eventsthe last days in Kazakhstan have not bypassed the crypto market. It is likely that the first cryptocurrency collapsed amid the Internet shutdown in the country where most of the mining pools are concentrated.

After blocking Internet access, generalThe hash rate decreased from a peak of 229 EH/s to 168 EH/s. The decrease in hash rates primarily affected large pools: 1THash, OKEx Pool and KuCoin Pool. Kazakhstan accounts for 18% of all Bitcoin hash activity. Most of the capacity remained unaffected, but this was enough to cause panic in the market and raise the fear index to an extreme value of -15. 

In addition, local traders were disconnected from crypto exchanges and could not manage their positions at the time the market fell.

This whole situation can lead to re-migration of miners, but from Kazakhstan.

The second, no less important, factor – policyUS Federal Reserve System. The Fed has chosen an aggressive policy to combat uncontrolled inflation. The Treasury announced the withdrawal of accumulated dollar reserves to restore the balance of the money supply. This means that many sectors of the economy will be underfunded. In combination with the upcoming March increase in the Fed key rate, this led to a decline in the stock market, a fall in the S&P 500 indices by 2% and the Nasdaq by 3.3%. 

Decrease in hash rate, market slowdown and fallshares of tech giants pulled the cryptocurrency market with them. Bitcoin correlated with it sank more due to high volatility. In addition, at the end of the year, institutional assets were withdrawn from many crypto funds to rebalance annual reports. And the margin market has been unbalanced for a long time in the ratio of long positions to short positions. This situation often leads to manipulation by market makers.

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