Bitcoin on Tuesday evening declined to a five-month low amid China’s intensifying crackdown against cryptocurrency mining in the country. The largest cryptocurrency sank as low as $29,511 at the time of filing this report, below $29,773 for the first time since January 22, according to the data from CoinMarketCap. “China used to form a major market for both trading and mining. As this has got hit due to new strict regulations in the country, it is affecting the global market. China always has had varied and confusing regulations in the past, and after the corrections this time, the global market should become more resilient to uncertainties in China. This event will get recorded in history as one another event towards the decentralization of cryptocurrencies,” Sathvik Vishwanath, Co-Founder & CEO, Unocoin told Financial Express Online.
China’s English newspaper Global Times had reported on Sunday that over 90 per cent of the country’s Bitcoin mining capacity is likely to be closed, at least for the short term, after local authorities mandated mining halt in Southwest China’s Sichuan province – among the country’s largest crypto mining bases. Earlier, regulators in Northwest China’s Xinjiang Uygur autonomous region, North China’s Inner Mongolia autonomous region, and Southwest China’s Yunnan Province had announced rules to curb Bitcoin mining, the newspaper added. Importantly, Bitcoin’s hash rate has also dropped from its peak of 180.666 million terahashes per second on May 14, 2021, to 120.461 million on June 21, as per blockchain.com. Hashrate is referred to the computational power used to mine and process transactions.
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“I think Bitcoin might hit about $25k and should rebound from there. This is obviously happening on the back of the ban in China, both on mining as well as trading. Although this is a long-term positive as mining will shift out of China. While trading is a bit of a concern even as China has been banning Bitcoin for seven years now. So, the ban itself is not new. By saying it is a ban won’t matter unless China makes it a criminal offense and it is unlikely they will do that as there are too many citizens who own Bitcoin or crypto in China,” Atul Chatur, co-founder of Antilles Cryptocurrency Exchange (ACE-X) told Financial Express Online.
Other major currencies such as Ethereum and Dogecoin have also dropped. While Ethereum had dropped to $1,718 on Tuesday from $1,700 on March 29, after peaking at $4,306 on May 12, Dogecoin had declined to $0.1667 from $0.7188 on May 8, 2021. The combined market cap of all cryptocurrencies was down to $1.15 trillion – the lowest since $1.17 trillion on February 5, 2021.