Kazakhstan bites bitcoin

Bitcoin volatile over Kazakhstan unrest

Bitcoin and other digital Dutch tulips have endured a torrid week thus far, with bitcoin falling 4.0% to USD 41.400.00 in Asian trading. Kazakhstan is the world’s second-biggest bitcoin mining hub and while Russian troops are shooting protestors there to restore order, bitcoin mining and the internet have been taken offline. I am struggling with a couple of crypto concepts at this point.

If there is less bitcoin mining being done, surely the prospect of lower supply is bullish, and not bearish for bitcoin? Certainly, the limited supply is what “institutional experts” have been saying is a major reason bitcoin’s price is going to the moon, or at least USD 100,000.00? Maybe it’s something to do with distributed ledger monitoring going offline as well, but that would involve blockchain, and I haven’t heard that mentioned in the same sentence as crypto for over a year.

Secondly, how can cryptos become replacements for fiat currencies around the world when mining and ledger monitoring are located in Kazakhstan? We don’t call it the Norway or Switzerland of Central Asia do we? For that reason, having the world of crypto’s reliant on any country ending in “‘stan” or “‘ia” seems risky. Only the European’s have been that stupid in recent times, tying their gaseous energy security to Russia, and look where that’s got them.

Anyway, a weekly close this evening below USD 42,400.00 would be a negative technical signal. But I believe USD 40.500.00 and USD 39,500.00 are the real levels to watch. Before the haters come out and throw dirty tee-shirts and empty pizza boxes at me while singing Bella Ciao, I believe the sell-off has come too far, too fast. Also, note my supply comments above re bitcoin mining disruption. The relative strength index (RSI) indicator has moved into very oversold territory, suggesting bitcoin could rally from here. I see no reason why it could not recapture USD 45.000.00 in the shorter term.

Either way you look at it, this weekend Saturday and Sunday trading sessions could be emotional whether you are long or short. V for volatility, not direction.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Jeffrey Halley

Jeffrey Halley

Senior Market Analyst, Asia Pacific
With more than 30 years of FX experience – from spot/margin trading and NDFs through to currency options and futures – Jeffrey Halley is OANDA’s senior market analyst for Asia Pacific, responsible for providing timely and relevant macro analysis covering a wide range of asset classes. He has previously worked with leading institutions such as Saxo Capital Markets, DynexCorp Currency Portfolio Management, IG, IFX, Fimat Internationale Banque, HSBC and Barclays. A highly sought-after analyst, Jeffrey has appeared on a wide range of global news channels including Bloomberg, BBC, Reuters, CNBC, MSN, Sky TV, Channel News Asia as well as in leading print publications including the New York Times and The Wall Street Journal, among others. He was born in New Zealand and holds an MBA from the Cass Business School.
Jeffrey Halley
Jeffrey Halley

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