Bitcoin Falls Below $43,000, Safemoon Down 69%; Here Is the Cause of the Sell-Off and What Analysts Say

Bitcoin price slid to a one-month low of $42,500 on Jan. 5 as minutes from the Federal Reserve’s last meeting in December indicated that officials deliberated whether to start trimming the U.S. Central Bank’s robust $8.3 trillion balance sheet. According to analysts, a move to shrink the balance sheet might put downward pressure on Bitcoin.

The drop in Bitcoin price also coincides with the news of the Bitcoin mining hash rate plunging 13.4% due to Kazakhstan’s political unrest due to a sharp rise in fuel prices. Kazakhstan, the second-largest country in the world regarding Bitcoin (BTC) mining hash rate shut down the nation’s internet as the country’s presiding cabinet resigned.

The move dealt a severe blow to Bitcoin mining activity in the country. As per data compiled by YCharts.com, the Bitcoin network’s overall hash rate dropped 13.4% in the hours after the shutdown from about 205,000 petahash per second (PH/s) to 177,330 PH/s. The country accounts for 18% of the Bitcoin network’s hash activity.

The altcoin market was also hit with selling pressure as several tokens recorded significant losses.

Safemoon is down 69%, but there is no need to worry for users. The network announced its migration to the SafemoonV2 on January 2. According to CoinGecko data, the old Safemoon or V1 is down 69% while the new and active Safemoon V2 is down 12%. Safemoon users are dumping their old tokens for the new, thus explaining the drastic drop. According to its website, support for the V1 token has officially closed while encouraging migration to the new V2.

At the time of publication, selected altcoins such as Chainlink (LINK,+5.61%), Band protocol (BAND, +11.60%), Uma (UMA, +12.19%), Moonriver (MOVR,+4.76%), Anyswap (ANY,+16.60%) were an exception as these traded in green.

Bitcoin traded at $43,150 at press time.

Here is what analysts are saying

The crypto fear and greed index, which indicates the market’s sentiment, has shifted into the ”extreme fear” territory, suggesting traders are more fearful.

Crypto analyst, Will Clemente speaks on the impact of the sell-off ”Bitcoin has wiped out roughly $315M of perpetual futures open interest in 30 minutes”.

Before the selloff, crypto analyst Kaleo stated ”I’m starting to lean bearish. Just doesn’t feel right that we’ve been consolidating in this range for so long without being able to reclaim any significant levels higher”

For Crypto analyst Michael Van de Poppe, the bottom may be in if Bitcoin recovers above $46k, ”And the scenario of the drop beneath $46K is taking place on Bitcoin here. The question becomes; will we be hanging here taking the liquidity & breaking back above $46K? In that case, the bottom is in. Comparable to the structure in May”.

The analyst earlier pinpointed $40,000-$42,000 as the crucial area to hold for Bitcoin, with action above it matching “accumulation.”

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