Bitcoin’s (BTC) general downtrend continued on Monday morning, despite the coin showing a strong 17% rebound overnight. As the coin continues to nurse wounds from its recent 43% price drop from an all-time high, more turbulence could yet be in store for Bitcoin and the broader cryptocurrency market.
Several large Bitcoin miners opted to cease operations in China this past weekend following the news that Chinese authorities were planning a crackdown on cryptocurrency mining.
By Monday morning, three Bitcoin mining pools had announced plans to halt activities in China. BTC.TOP, which accounted for as much as 2.5% of the overall Bitcoin hashrate during the past week, said it would shut up shop on the Chinese mainland and shift its operations to North America.
The Huobi cryptocurrency exchange’s offshoot company, Huobi Mall, also announced on Sunday that it would no longer sell crypto mining rigs in China and that it would suspend its mining operations there. Meanwhile, mining company HashCow said it would cease purchasing new Bitcoin mining rigs for the time being.
On May 21, Hong Kong authorities announced an impending ban on cryptocurrency retail trading, in a move that would restrict trading to only accredited investors with more than $1 million in their portfolios.
Three of China’s major trade associations released coordinated warnings against cryptocurrency investing last week. Telephone hotlines were set up in Inner Mongolia to encourage citizens to report any crypto mining activities they may have witnessed.
Bitcoin’s hashrate — a measure of how much computing power is being aimed at the blockchain by miners — dropped 30% leading up to the commencement of China’s recent spate of warnings. The hashrate fell from 171 Eh/s, to just over 118 Eh/s leading up to May 22. This could be interpreted as a sign that miners abandoned Bitcoin when the China news landed, or, that they’ve moved onto other more profitable coins amid BTC’s price drop.
China’s renewed crackdown on the cryptocurrency space is nothing new, yet the superpower’s announcements continue to wreak havoc on the cryptocurrency space. Alongside Elon Musk’s earth-shaking tweets, China’s recent announcements have been blamed for sinking the cryptocurrency market — which remains $1 trillion worse off than this time just 12 days ago.
However, given that many coins and tokens just jumped anywhere from 500% to 2,000,000% in perceived value in the space of months, and given that the forces of gravity are still in play, other explanations for the market crash are very much available.
Chinese Bitcoin miners abandon ship ahead of incoming crypto crackdown