Published on Mon, Jun 21, 2021
Bitcoin dropped over the weekend amid a focus on Chinese mine closures and potential regulatory scrutiny.
The largest cryptocurrency fell 5.5% to US$34,142 ($45,890) as of 10.50am Sunday in New York, dropping for a fourth time in the past five sessions. Ether, the second-biggest, declined 5.9% to US$2,095.
The hashrate in China is dropping significantly as Bitcoin mines are being closed, Jonathan Cheesman, head of over-the-counter and institutional sales at crypto-derivatives exchange FTX wrote in an email Saturday, citing reports on Twitter from handle @bigmagicdao.
“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. When the coin experienced a death cross in March 2020, for instance, that was at the start of a yearlong rally.
Cryptocurrencies have been enduring a lull recently. Bitcoin is trading at about half its record high of nearly US$65,000 reached in mid-April. The market value of all cryptocurrencies is about US$1.45 trillion, as measured by CoinGecko, versus a high around US$2.6 trillion last month.
One of the factors cited has been concern about China clamping down on mining amid concerns about energy usage, and in the wake of deadly coal accidents.
The city of Ya’an in the southwestern region of Sichuan has promised the provincial authorities to root out all Bitcoin and Ether mining operations within one year, said a person with knowledge of the situation. According to a report in the Communist Party-backed Global Times, the closure of many Bitcoin mines in the province has resulted in more than 90% of China’s Bitcoin mining capacity being shuttered.
About 65% of the world’s Bitcoin mining took place in China as of April 2020, according to an estimate by the University of Cambridge.
In addition, Edward Moya, senior market analyst at Oanda Corp., said Bitcoin was being pressured by the sudden drop by the Titan token to nearly zero — a stablecoin that had drawn even billionaire Mark Cuban. Regulators had already been expressing concern about stablecoins, and Cuban himself encouraged further regulation of the space after the episode.
“Bitcoin tumbled as the demise over the Titan token raised the pressure of regulators to deliver more protections for the public,” Moya said in an email Friday. “Titan’s crypto crash was a surprise to many as it is a partially collateralized stablecoin. Given the risk-off environment that is hitting Wall Street, cryptocurrencies are under pressure.”