Bitcoin tumbled almost 10% on Monday as recent volatility in the cryptocurrency market showed no signs of dampening down, with market players citing jitters over China’s expanding crackdown on bitcoin mining in thin liquidity for the losses.
Bitcoin fell as low as $32,094 to its lowest in 12 days, dragging smaller coins down. It was last down 8.3%, on course for its biggest daily drop in a month.
The world’s biggest cryptocurrency, long plagued by volatility, has lost over 20% in the last six days alone and is down by half from its April peak of almost $65,000. Still, it has gained over 10% this year.
The drop comes amid a growing crackdown on cryptocurrencies in China, where authorities in the southwest province of Sichuan on Friday ordered bitcoin mining projects to close.
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The State Council, China’s cabinet, last month vowed to clamp down on mining and trading as part of a series of measures to control financial risks. Data on mining is scarce. Yet production of bitcoin in China accounted last year for about 65% of global production, according to data from the University of Cambridge, with Sichuan its second-biggest producer.
Companies that mine bitcoin – an energy-intensive process – typically hold large inventories of the cryptocurrency, with any moves to sell large amounts depressing prices. “(The) crackdown on Chinese miners might mean that they are offloading coin into a thin market and taking us lower,” said Ben Sebley of London-based crypto firm BCB Group.
Published in The Express Tribune, June 22nd, 2021.