Crypto

Why did the Kazakh protest drop Bitcoin, and why are institutional investors afraid?

Bitcoin on Friday fell 5% to its lowest level since the end of September, dropping below $41,000 amid a broader cryptocurrency sell-off. Bitcoin is trading at $42,090, losing 2.37%, after reaching $40,938, the lowest level since September 29.

The world’s largest cryptocurrency has lost value 40% since hitting an all-time high of $69,000 in November, and the volatility that has dogged it since its birth 13 years ago remains high for now. In addition, the global computing power of the bitcoin network fell sharply this week after turning off the Internet in Kazakhstan, where miners fled from Chinese repression in the summer and autumn. The riots subsided a little on Friday morning.

Bitcoin also came under pressure after the minutes of the last meeting of the U.S. Federal Reserve System published on Wednesday indicated that the regulator seems to be leaning towards more aggressive political actions, undermining investors’ appetite for riskier assets. “We are currently seeing widespread negative risk sentiment across all markets as concerns about inflation and rate hikes appear to be the focus of speculators,” said Matthew Dibb, chief operating officer of Singapore-based crypto platform Stack Funds.

“Liquidity in BTC has been quite low on both sides, is a risk of a return to the mid-30,000’s in the short term.” As a result, ether’s second-largest token by market capitalization fell 8.6% to $3,114, the lowest level since October 1. Kazakh events The global bitcoin hashing rate dropped after Kazakhstan shut down the Internet amid violent protests. Last year, Kazakhstan became the second-largest bitcoin mining center after the United States.

Disabling the switch highlighted the concentration of miners located in this Central Asian country. On Wednesday, turned off the entire Internet in Kazakhstan due to mass protests after the government lifted the price ceiling for liquefied petroleum gas. Since then, they have turned into a severe challenge to the country’s leadership and even provoked the resignation of the presidential cabinet. A few hours after the Internet went down, bitcoin’s hash rate dropped by 12%, Cermak, vice president of Research at The Block, said in a tweet. Hashing speed is a crucial measure of how much computing power is required to support the network and create bitcoins.

Also necessary is the bitcoin security protocol, which prevents double spending of tokens. “The hashing speed is not directly related to the bitcoin price, but it gives an idea of the security of the network so that the drop may scare investors in the short term,” said Marcus Sotiriou, an analyst at digital asset broker GlobalBlock. According to the Cambridge Center for Alternative Finance, Kazakhstan became the second-largest bitcoin mining center after China, which used to be the main center. Still, later it sharply limited the mining of cryptocurrencies.

The USA is the world leader in a hash rate share of 35.4% by the end of August 2021, compared with 16.8% end of April. In Kazakhstan, the growth reached 18.1% against 8.2%. In recent months, Kazakhstan has been working to regulate its fast-growing crypto mining industry. The nation has since created a new registry to legitimize the space, as first reported by The Block. Institutional demand While digital assets are gaining widespread acceptance, institutional investors and asset managers remain concerned.

At the top of the list is cryptos security, which has surpassed ice volatility, according to a report commissioned by Nickel Digital Asset Management, which Bloomberg first published.

After interviews with 50 asset managers and 50 institutional investors in the U.S., UK, Germany, France, and the United Arab Emirates, who jointly manage assets worth about $108.4 billion, here are the four main issues that cause them concern:

79% named asset security the paramount consideration, 67% expressed doubts about price fluctuations or price volatility.

56% said that this is market capitalization. 49% said it was regulatory uncertainty. “Our research shows that institutional investors have correctly identified storage and security as the most important differences of this unique asset class,” said Henry Howell, head of business development at Nickel Digital. Meanwhile, only 12% said they were concerned about the cryptocurrency’s carbon footprint, which requires a tremendous amount of energy for servers to process transactions and mine new tokens.

Nickel Digital, Europe’s largest regulated hedge fund manager of digital assets, also said that 76% of respondents were optimistic that;

Gary Gensler, chairman of the U.S. Securities and Exchange Commission, would be able to convince Congress to grant his agency more authority to manage digital assets by next year.

“If the Securities and Exchange Commission these additional powers, 73% of institutional investors and asset managers believe that this will have a positive impact on the price of cryptocurrency and digital assets – 32% believe that this will have a very positive effect,” the study says.

Gensler, who taught a cryptography course at the Massachusetts Institute of Technology, said he was neutral or even intrigued by the technology but was not neutral about investor protection. He also noted that, in his opinion, digital assets could accelerate economic progress and become more widely used.

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