Top line
Following a rise in prices that ushered in Coinbase’s long-awaited debut earlier in the week, the cryptocurrency market plummeted early Sunday, after disruptions in China led to massive declines in bitcoin mining rates – storage prices and stimulating billions of dollars in liquidations .
The market is already in full swing, but bitcoin prices are still down about 10%.
Getty Images
Key facts
An overnight crash that began late Saturday reduced the total market capitalization of cryptocurrencies around the world by about $ 310 billion in less than 24 hours, shrinking the market from more than $ 2.2 trillion to less than 1 , $ 9 trillion at about 8 a.m. East, according to crypto-data site CoinMarketCap.
As of 9:45 a.m. Eastern market, the market has risen back to about $ 1.95 trillion, but the price of bitcoin – floating at about $ 54,750 – is still down about 10.5% in the last 24 hours.
Cryptocurrency liquidations during the flash crash totaled more than $ 10 billion, according to Bybt data, reaching their highest levels this year as the price of bitcoin fell more than $ 10,000 below its last high of nearly $ 65,000 on Wednesday.
Analysts reported sharp losses at a sharp drop of almost 50% in bitcoin’s hash rate, which measures the total processing power used to extract the cryptocurrency and process its transactions, following disruptions in China’s Xinjiang region, which hosts one of the largest bitcoin mining networks in the world.
Caused by an explosion at the Xinjiang coal mine on April 10, the outages took days to reach the bitcoin hash rate, which fell from an all-time high of 215 exahash per second on Wednesday to about 120 exahash per second early Sunday .
The price of bitcoin has fallen by about 12% since the hash rate began to fall, but is still rising by 750% this year.
Crucial quote
“Price and hash rate [have] has always been correlated, “researcher and former cryptocurrency Forbes collaborator Willy Woo said in a series of tweets on Sunday at the beginning of the year, referring to a similar blockage in November 2017 and noting that once the hash rate began to normalize in both instances, the price of bitcoin also began to recover.
Key background
Although increased institutional adoption and inflationary concerns have raised the cryptocurrency market to new highs in recent years, bitcoin’s steady volatility has raised concerns on Wall Street that the symbol is an insecure asset deposit. However, this feeling can change. Dallas Federal Reserve Chairman Robert Kaplan said Friday that, despite Bitcoin’s volatility, the symbol has proven to be a valuable depository. “The challenge [with] bitcoin is how widely it will be adopted – at this point, it is clear that it is a valuable deposit, “Kaplan said.” Obviously, it moves a lot in value, so that this prevents it from spreading too much as a means of exchange and wide adoption, but that can change and that will evolve. “
Additional readings
The Bitcoin Hash Mining rate is declining like the interruptions established in China (Nasdaq)
Dogecoin rises to all-time highs, reaching $ 52.2 billion in market capitalization as Robinhood reports interruption problems due to heavy cryptocurrency trading (Forbes)