Ethereum, Bitcoin Price Crash Amid Interest Hike Threat; But Bitcoin Whale Buys the Dip

The news that the Federal Reserve may spark interest in the coming months has caused a huge panic in the cryptocurrency industry. Bitcoin, Ethereum, and the entire cryptocurrency market have plummeted in value. However, one bitcoin whale took advantage of the drop to buy $24 million worth of bitcoin.

Since Friday, the cryptocurrency markets have continued to lose value at alarming rates. Bitcoin leads the decline, down 6 percent to $41,737 at the time of writing. According to USA Today, this caused Ethereum to drop by 8 percent, Solana by 10.6 percent, Terra by 9.1 percent, and Avalanche by 9.7 percent.

Ethereum price drop: Why is cryptocurrency dropping?

Cryptocurrency markets are generally volatile, so their price movements are highly unpredictable. However, the recent decline may be related to two recent developments.

The first is the Federal Reserve’s announcement that interest rates may rise for some time in March. According to the Wall Street Journal, the Federal Reserve is using this to fight inflation and tighten regulation on the cryptocurrency markets. Many traders saw this as a threat to their investments.

Second, the ongoing unrest in Kazakhstan, according to Cnet. Since the crackdown in China led to a ban on cryptocurrency mining, traders have moved their operations to Kazakhstan. This country is known as the second largest bitcoin miner, behind the United States. However, due to protests over fuel prices, the Kazakhstan government shut down its internet connection. This caused the hash of Bitcoin to drop by 13 percent.

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Bitcoin Price Drop: Should You Invest in Bitcoin?

The sudden drop in Bitcoin is a devastating blow to Bitcoin miners. Many get their revenue by offering bitcoin mining services, so when the market goes down, their revenue also goes down. Due to the nature of the market, these miners have no way to recoup their costs. Ultimately, miners may become discouraged and bitcoin net income may continue to drop dramatically.

The Spectator indicator has listed all the value of Bitcoin in the past few months to indicate massive declines.

The change in the marketplace Bitcoin Fear and Greed Index pushed Bitcoin to record 18, with traders feeling “extremely afraid.”

Bitcoin Whale Buys $24 Million Bitcoin

Although these changes are causing disruption for many traders, not everyone sees them as a bad sign. According to Cryptopotato, the third largest bitcoin whale bought coins during the drop in crazy amounts.

On Monday, whales bought 456 bitcoins at an average of $46363 each. After that, 372 bitcoins were bought for $17,122,242.1 on Tuesday.

The whale is expected to hold a heap of over 121,000 BTC at the moment. That means their holdings are enough to rival the infamous MicroStrategy with its 124,391 holdings.

It is difficult to determine whether Bitcoin can recover from the sudden drop. However, many other investors still believe in its potential. Hopefully trading will improve in the coming days.

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