(Reuters) -Bitcoin, the world’s largest cryptocurrency, fell 14 percent to $ 51,541 on Sunday, reversing most of its big gains over the past week.
Bitcoin was last traded at 10%, at $ 53,991 starting at 1320 GMT, $ 12,000 below record highs on Wednesday. The smaller rival Ether, the currency linked to the blockchain ethereum, fell 10% to $ 2,101.
The data site CoinMarketCap cited here the outage in the Chinese region of Xinjiang, which apparently feeds a lot of bitcoin mining, for sale.
Luke Sully, CEO of Ledgermatic, a specialist in digital asset treasury, said in an email that people “may have been sold on the news about China’s power outage and not about the impact it actually had on network ”.
“Power outages expose a fundamental weakness; that, although the Bitcoin network is decentralized, its extraction is not “, added Sully.
Some blockchain analysts widely followed on Twitter have indicated a sharp drop in the “hash rate” due to the outage.
The Hash Rate refers to the volatility index that measures the processing capacity of the entire Bitcoin network and determines the power needed by miners to produce new Bitcoins.
“Usually, shocks to the hash rate do not cause price declines. A reduction in the hash rate slows down transactions, which ironically makes it more difficult to move currencies to exchanges for sale. The recent fall in prices is well within the limits of typical volatility, it is noise not the signal, “said Edan Yago, co-founder of the Bitcoin-based decentralized financing protocol Sovryn.
The withdrawal in Bitcoin comes after Turkey’s central bank banned the use of cryptocurrencies for purchases on Friday.
Edward Moya, a senior market analyst at OANDA, said the cryptocurrencies were ripe for a withdrawal.
“The market has become overly aggressive and optimistic about anything,” said Edward Moya. “It could have been any rising headline that could have triggered this reaction.”
Many cryptocurrency markets operate 24/7, setting the stage for price fluctuations at unpredictable hours. Historically, retailers and day traders have driven the movements.
Despite the sudden sale, bitcoin is still growing by 89% so far in 2021, driven by its main acceptance as an investment and means of payment, accompanied by the acceleration of retail cash in shares, exchange traded funds and other risky assets.
Report by Radhika Anilkumar in Bengaluru and Thyagaraju Adinarayan in London; additional reporting by Ira Iosebashvili in New York; Edited by David Clarke and Emelia Sithole-Matarise