Crypto market collapses as China steps up crackdown on bitcoin mining

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Bitcoin’s decline comes after the flagship crypto hit a level of $ 41,330 on June 15. Photo: Marco Bello / AFP via Getty Images

A massive sell-off in the crypto market continued over the weekend, with the world’s two biggest tokens, bitcoin (BTC-USD) and ethereum (ETH-USD), both declining further as China’s crackdown accelerates.

China has extended the crackdown on the bitcoin mining industry to its largest bitcoin-producing provinces, including the southwestern province of Sichuan.

Sichuan officials ordered cryptocurrency mining projects in the main mining hub to shut down on Sunday, putting more pressure on one of the world’s most vital markets for digital currency trading and mining. .

Bitcoin fell below $ 35,000 (£ 25,341) on the news, crashing 7.9% to $ 33,596. Ethereum – the second largest crypto by market cap – fell 9.2% to trade at $ 2,065. Dogecoin meme token (DOGE) fell 12.5% ​​to $ 0.26 during the session.

The total value of the crypto market has declined to $ 1.4 billion in the past 24 hours, losing nearly 8%, according to data from CoinMarketCap.

Last month, Chinese Vice Premier Liu Hu vowed that China “will severely crack down on illegal securities activities and severely punish illegal financial activities.”

Five-day graph of Bitcoin.  Chart: Yahoo Finance

Bitcoin fell below the $ 35,000 (£ 25,341) mark on the news, crashing 7.9% to $ 33,596 on Sunday afternoon in London. Chart: Yahoo Finance

The environmental impact of cryptos has been of great concern lately, and North American bitcoin miners are striving to bring transparency to their energy use, through the Bitcoin Mining Council.

Tesla boss (TSLA) Elon Musk also sparked a sale after he said the electric carmaker was abandoning plans to accept bitcoin as payment over environmental concerns.

Read more: Bitcoin, Ethereum collapse as China promises ‘tough crackdown’

The crypto world has been hit by several announcements in recent days as the reality of regulation scares investors.

Last week Coinbase (PIECE OF MONEY), co-founder Fred Ehrsam warned that “most” cryptocurrencies and crypto-assets “will not work” and that “90% of NFTs” will be “of little or no value in three to five years.”

On Wednesday, the U.S. Federal Reserve said it could hike interest rates by the end of 2023 on Wednesday. Assets deemed risky, like some stocks and crypto, have also been weighed down by lingering concerns that the Fed may end its bond buying program earlier than expected.

On Thursday, the World Bank also rejected a request from El Salvador to help implement bitcoin as legal tender.

The bank said it couldn’t help El Salvador’s plans due to the environmental impact of bitcoin mining and the downsides of transparency.

Watch: What is bitcoin?

Meanwhile, the UK’s Financial Conduct Authority (FCA) reiterated its warning that people “should be prepared to lose all their money” if they invest in cryptocurrencies.

The regulator estimated that 2.3 million adults in Britain now own crypto assets, up from 1.9 million last year, with a growing number seeing them as a supplement or alternative to traditional investments.

UK bank TSB is also seeking to ban more than five million customers from buying cryptos amid fears of “excessively high” fraud rates on trading platforms. “We take our obligation to protect customers very seriously and continually review merchants and websites with excessively high fraud rates,” a TSB spokesperson said.

TSB’s move follows similar steps taken by other UK banks in cracking down on financial cybercrime. Earlier in May, Barclays (BARC.L) Monzo and Starling Bank temporarily banned cash transfers to crypto platforms such as Binance.

Read more: Crypto pulls back as bitcoin and ethereum push slight selloff

The drop comes after bitcoin hit $ 41,330 on June 15, breaking through a key resistance area of ​​$ 41,250, however, it has since declined. But, experts believe that bitcoin’s breakthrough last week could be “the start of a new bull run.”

“It might just turn out to be a rally of relief before the next crash, as the few retail investors who have managed to keep their cool take the opportunity to sell,” said Tim Frost, CEO of Yield App. “Ethereum hasn’t followed with quite the same fever, staying fairly firmly around the $ 2,500 mark. There doesn’t seem to be a huge catalyst for a rally for either crypto. coins around the corner. “

According to a Bank of America survey, 81% of fund managers say bitcoin is still a bubble. The flagship crypto fell around 37% last month and its price is down 38% from its peak of $ 64,829 in mid-April.

Watch: What are the risks of investing in cryptocurrency?



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