Bitcoin plunged to a three-month low late Friday amid concerns about US monetary policy tightening and the internet shutdown in Kazakhstan, the world’s second-largest bitcoin mining hub.
Bitcoin dropped below $41,000 to $4,0749.90 after 10:50 a.m. ET on Friday, reaching its lowest level since September 29, according to data from coin gauges. It was last traded down 2.9% at $41,947.75.
The world’s largest cryptocurrency began falling earlier this week after minutes from the Federal Reserve’s December meeting hinted that the US central bank would back down from pandemic-era stimulus.
The hawkish comments led to a selloff in global stock markets that extended to cryptocurrencies. Bitcoin bulls often describe it as an asset uncorrelated with traditional financial markets, but experts have noted increasing similarities in the price movements of Bitcoin and stocks.
Other cryptocurrencies continued their decline on Friday, with Ethereum losing 6.8% and Solana dropping 7.7%.
Another piece of news weighing on cryptocurrency prices is the move by Kazakhstan’s president to shut down internet service after bloody protests against the government.
The Central Asian country accounts for 18% of the bitcoin network’s processing power, according to the Cambridge Center for Alternative Finance. Many cryptocurrency miners have fled China to neighboring Kazakhstan due to Beijing’s ban on virtual currency mining.
According to some estimates, internet shutdowns in Kazakhstan have cut off up to 15% of the offline network.
Marcus Sotirio, an analyst at UK digital asset broker Global Block, said that bitcoin’s computing power “is not directly correlated with the price of bitcoin, but it does give an indication of the network’s security, so a drop could scare off investors in the short term.” In a Thursday note.
CNBC’s Mackenzie Segalos contributed to this report