Despite falling prices, one crypto analyst says bitcoin ‘could see a massive breakout in 2022 and take the crypto market with it.’
Cryptocurrency prices were down Monday as the sector was battered by interest rate hike concerns and an internet shutdown in Kazakhstan.
Bitcoin was down 1.8% to $41,729, while ethereum was off 3% to $3,996.77 and meme coin dogecoin was dropped 4.9 to $0.141741 at last check, according to Coindesk.
A combination of rising government bond yields, a firmer U.S. dollar and the shutdown of key bitcoin mining capacity in Kazakhstan last week have all combined to push bitcoin prices in overnight trading.
“Chinese Crypto-Miners who rushed out of China and into Kazakhstan last year are now paying the price for poor planning,” said David Lesperance, managing partner of immigration and tax adviser at Lesperance & Associates. “On January 5th in response to political protests, the Kazakh President turned off the internet.”
No internet means that miners can’t communicate with the bitcoin network, Lesperance said, and, as a result, “the hash rate collapsed as a full 12% of Bitcoin’s computational power went poof!”
He noted that many Chinese crypto miners who set up in the U.S. and other countries have run into immigration problems.
Lesperance said the keys to long-term success for crypto miners include access to energy, preferably green, and a politically stable jurisdiction that allows crypto miners to at least visit if not work at the site location.
Zak Killermann, fintech and crypto expert with Finder, said most major cryptos saw double digit losses over the last week, “and a tough year may be ahead for cryptocurrencies with the Fed planning numerous interest rate hikes in 2022.”
“At its peak, Kazakhstan accounted for nearly 20% of Bitcoin’s global hashrate,” Killermann said, “and with the situation still uncertain there may be more turmoil in the price of BTC related to Kazakhstan. But don’t count the bulls out just yet.”
He said that bitcoin had a wild year in 2021, seeing highs of nearly $70,000 in November and lows of more than half that, bottoming out in July at just under $30,000.
“With more retail involvement, more avenues for folks to get involved, and more globalization, BTC could see a massive breakout in 2022 and take the crypto market with it,” he said.
Nearly 7% inflation rates in the U.S.make crypto an ever-more attractive investment, Killermann said, “and this week’s testimony of Fed Chair (Jerome) Powell is a key event to watch.”
Winston Ma, managing partner of CloudTree Ventures, and author of The Digital War – How China’s Tech Power Shapes the Future of AI, Blockchain and Cyberspace, said that metaverse and gaming-related tokens, like Mana and AXS, suffered steep losses tokens in the broader crypto’s market sell-off.
Still, he said, the market interests towards metaverse and gaming remains high, as GameStop (GME) – Get GameStop Corp. Class A Report shares jumped on Friday after news that the video game retailer is planning to create a marketplace for non-fungible tokens (NFTs) and establish cryptocurrency partnerships.
“That correlation may simply be emotional, but the big picture is, the gaming industry is fast-becoming one of crypto’s most potent areas of application,” Ma said. “The momentum is extremely strong after Facebook changed its name to Meta to highlight its focus on the ‘metaverse’ because many believe that immersive and interactive gaming is closely related to the metaverse.”
