Bitcoin, Ethereum, Dogecoin, and the rest of the cryptocurrency market are showing red flags
Volatile and unpredictable cryptocurrency crashes aren’t a new thing anymore, but every dip has a reason. After all the laurels it receives, Bitcoin fell to a two-week low due to the cryptocurrency crackdown in China. Deja Vu? This time, the authorities in the southwest province of Sichuan ordered a shutdown on all Bitcoin mining projects.
As a result, Bitcoin’s price dipped almost by10% while the other popular altcoins like Ethereum dropped by 12%, falling to the US$2,000 mark. Dogecoin has also witnessed a dip of 12%. Over the past week, the biggest cryptocurrency lost over 20% which is almost half of its all-time high of US$60,000.
China’s Stance on Cryptocurrencies
People’s Bank of China has informed the payment platform, Alipay, and the other local banks to halt all services linked to cryptocurrency trading. They were also told to stop all payment channels and not to encourage crypto exchanges. On the other hand, Ya’an, a Chinese city with access to advanced hydropower has decided to rein in crypto mining. According to experts, the computational power used for mining (also known as hash rate) is losing its power, because of the stringent regulations.
The University of Cambridge revealed striking numbers, which indicated that Bitcoin mining in China resulted in 65% of the global Bitcoin production. Companies that can invest in energy-intensive technologies are the only ones that can mine cryptocurrencies. They also hold large inventories to store the massive amounts of mined digital coins, with intentions to sell large amounts and decrease their prices.
China’s crypto crackdown has also affected the token used in Defi applications. Defi or decentralized finance applications allow people to lend, borrow, trade directly, without any third-party involvement, using blockchain technology. For example, Titanium token is widely used in DeFi. From US$60, the token’s value went down to US$0, which is rare even for the volatile cryptocurrency market. Mark Cuban, the billionaire who made news by investing in Polygon, told Bloomberg that, this cryptocurrency decline was enough to make him unhappy, and a lot of other investors share the same sentiments.