Bitcoin continued its descent on Monday, dropping 7% to a price of $32,801 in the early morning hours. This is the first time the world’s largest cryptocurrency fell below $33,000 since June 8.
“Bitcoin sank Monday on reports that China has intensified its crackdown on cryptocurrency mining,” reported CNBC. “ It was last trading at $33,243 as of 5:50 a.m. ET. Smaller rivals like ether and XRP also tumbled, down 8% and 7% respectively.”
“Many bitcoin mines in Sichuan were shuttered Sunday after authorities in the southwestern Chinese province ordered a halt to crypto mining, according to a report from the Communist Party-backed newspaper Global Times. More than 90% of China’s bitcoin mining capacity is estimated to be shut down, the paper said,” CNBC added.
“Authorities of Ya’an, located in the southwestern province of Sichuan, pledged at a Thursday meeting to screen and ‘rectify’ all Bitcoin mining firms within its jurisdiction,” Bloomberg explained, adding that some miners were reportedly “notified by their power suppliers that all plants in their area will be closed until further notice for ‘self-inspections.’”
According to Jonathan Cheesman, who leads “over-the-counter and institutional sales at crypto-derivatives exchange FTX,” the “hashrate” in China is “dropping significantly as Bitcoin mines are being closed,” as Yahoo! Finance noted.
“Longer term most see hashrate moving out of China as positive but in the near term may have/has already resulted in inventory sales,” Cheesman said.
“Cheesman also mentioned the death cross, which occurs when the 50-day moving average drops below the 200-day, but noted that ‘backtesting isn’t statistically significant’ on the signal for Bitcoin,” Yahoo! Finance added. “When the coin experienced a death cross in March 2020, for instance, that was at the start of a yearlong rally.”
The Chinese regime has reportedly been responsible for the increased cryptocurrency market volatility in recent months. In mid-May, the cryptocurrency market crashed, with Bitcoin and Ethereum posting “their largest one-day drop since March last year,” according to Reuters, “with losses in the market capitalization for the entire cryptocurrency sector approaching $1 trillion.”
Yahoo! Finance explained that the sharp decline was triggered “after China banned financial and payment institutions from providing cryptocurrency services.” According to the BBC, the communist regime also “warned investors against speculative crypto trading.”
Then, in early June, the Chinese government moved to block multiple crypto-related accounts on Weibo, the Chinese blogging platform, with more steps expected to follow, “including linking illegal crypto activities in China more directly with the country’s criminal law.”
As Reuters reported, “Over the weekend, access to several widely followed crypto-related Weibo accounts was denied, with a message saying each account ‘violates laws and rules.’” A bitcoin commentator known as “Woman Dr. bitcoin mini” on Weibo wrote that “It’s a Judgement Day for crypto KOL.” Chinese authorities blocked the account of the Key Opinion Leader (KOL) on Saturday.
After a large number of cryptocurrency KOLs were blocked in China, the price of bitcoin and other cryptocurrencies fell.
“Bitcoin’s sharp drop of 5% may be related to China’s Twitter Weibo ban on accounts involving crypto. But at present, it seems that accounts not involved in ads of exchanges have not been blocked,” tweeted Chinese cryptocurrency journalist Colin Wu.
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