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December 5, 2022
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Guide & Analysis

Bitcoin drops to $34,100 amid China’s mining crackdown

Bitcoin can re-search your support region at $30,000-31,000

Bitcoin tumbled over the weekend amid a focus on closure of Chinese miners and potential regulatory scrutiny.

The largest cryptocurrency fell 5.5% to $34,142 as of 10:50 am on Sunday morning in New York, falling for the fourth time in the last five sessions. Ethereum, the second largest, fell 5.9% to $2,095.

The hashrate in China is dropping significantly as Bitcoin miners are being shut down, Jonathan Cheesman, head of over-the-counter and institutional sales at the crypto-derivatives exchange FTX wrote in an email on Saturday, citing Twitter reports from handle @bigmagicdao .

“In the long term, most see the hashrate coming out of China as positive, but in the short term it may have/has resulted in inventory sales,” Cheesman said.

Cheesman also mentioned the death cross, which occurs when the 50-day moving average drops below 200 days, but noted that “backtesting is not statistically significant” in the signal for Bitcoin. When the coin suffered a death cross in March 2020, for example, it was at the start of a year-long rally.

Cryptocurrencies have gone through a lull recently. Bitcoin is trading for about half of the record nearly $65,000 reached in mid-April. The market value of all cryptocurrencies is about $1.45 trillion, as measured by CoinGecko, up from about $2.6 trillion last month.

One factor cited was concern about China cracking down on mining amid concerns over energy use and in the wake of fatal accidents with coal.

The city of Ya’an in southwestern Sichuan has pledged to provincial authorities to eradicate all Bitcoin and Ethereum mining operations within a year, said a person with knowledge of the situation. According to a Global Times report supported by the Communist Party, the closure of many Bitcoin miners in the province has resulted in the closure of more than 90% of China’s Bitcoin mining capacity.

About 65% of the world’s Bitcoin mining took place in China in April 2020, according to a Cambridge University estimate.

In addition, Edward Moya, senior market analyst at Oanda Corp., said Bitcoin was being pressured by the sudden drop of the Titan token to near zero – a stablecoin that even attracted billionaire Mark Cuban. Regulators had already expressed concern about stablecoins, and Cuban himself encouraged greater regulation of the space after the episode.

“Bitcoin crashed when the death of the Titan token increased pressure from regulators to offer more protections to the public,” Moya said in an email on Friday.

Source: Livemint

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