Fear grips BTC

A grim paint-by-numbers mosaic of bright red met our gaze. Shivers ensued, head to toe. But turns out we'd left a window open to air out some hockey equipment. Warmth returned eventually and green shoots were visible in crypto charts, albeit barely.

There was No. 11 coin, Avalanche (AVAX), gaining 0.2% over 24 hours. No. 14 Polygon (MATIC) rose 0.3%. The pair had apparently more substantially greened up as of the wee hours of Monday, but by 8:30 a.m. (EST) those gains had diminished.

No. 16 Chainlink (LINK) was in the red over 24 hours but has a relatively gaudy seven-day streak going, up 21.5%.

Bitcoin declined 2% to $41,100 over the past 24 hours, kicking off the second week of 2021 in a state of peril. Market participants sure seem petrified.

A BTC reunification with sub-$40K seemed likely over the early part of the weekend with the largest digital asset barely holding on to $40,500. As of Monday, at 8 a.m. (EST), BTC was clinging to $41K having shed 12.4% over the past seven days.

Falling-knife-catching traders are getting their palms impaled with long-leaning liquidation levels harkening to May of 2021 when BTC began to fall toward $30K. Per Glassnode’s Longs Liquidations Dominance metric, the majority of liquidations so far this year have involved longs (Cointelegraph).

With the price decline ever-steepening, the Crypto Fear & Greed Index hit 23/100, putting it into the “extreme fear” zone. 

Robust support for BTC at $38,000 seems quantifiable enough, on-chain and technical analysts insist. And disruptive (to hash rate) unrest in Kazakhstan is expected to abate.

Nevertheless, the market remains spooked. It's not just the fear/greed barometer.

Santiment tracks social trends data. The analytics firm reports most traders believe that crypto has officially entered a bear market. Santiment notes that the prevalence of bearishness across the board could be a very promising sign that weak hands are capitulating (U.Today).

Among reasons to be hopeful: Electric Capital’s Developer Report for 2021, which, per AMBCrypto, said that BTC now has a pipeline of more than 100 new developers coming into its ecosystem each month.

Unrest in Kazakhstan reportedly fueled by unhappiness with energy/autocratic policies is said to have interrupted as much as 18% of the world’s bitcoin mining operations so far this year. But violent clashes are said to be waning and there is a sense that normalcy could return to the community of miners, many of which had relocated to the central Asian country after getting shut down in China.

The uprising began Jan. 2 with protests against a New Year’s Day fuel price hike and within days the country lost it internet connection.

A few hours into the outage on January 5, The Block reported 12% of Bitcoin's worldwide computational power had vanished.

Extraction operations, including Antpool, Poolin and Binance, all saw their hash rates fall.  

Reuters, citing the country's energy ministry, said BTC mining consumes 8% of Kazakhstan's total generation capacity.

Local mining farms are mostly powered by antiquated coal-fired plants. It's a dirty and delicate issue for the government, which is attempting to lean into a clean, green economy. “What we have in Kazakhstan is heavy reliance on coal with very low prices,” said Eric Livny, regional economist at the European Bank for Reconstruction and Development.

In an attempt to crackdown on the trade, Kazakhstan introduced a new law which will apply extra taxes on crypto mining. That'll be later in the year. For now, the crypto community expects Kazakhstan’s internet and mining industry will return to normal this week (Cointelegraph).

BIT Mining, one of the largest BTC mining companies that relocated operations from China to Kazakhstan last year, is still evaluating the impact of political unrest in Kazakhstan, Chinese industry news agency 8btc reported Friday.

Despite the ongoing blackouts, miners in the country remain optimistic, Euronews said.

Local miner Didar Bekbau tweeted this past weekend: “Yes, no internet, so no mining...hopefully, next week everything will be okay.”