Bitcoin, the world’s largest cryptocurrency, fell 14% to $ 51,541 on Sunday, investing most of the big gains it made last week.
Bitcoin last traded 10% at $ 53,991 as of 1320 GMT, a whopping $ 12,000 below the record highs set on Wednesday. Smaller rival Ether, the currency linked to the etherum blockchain network, fell 10% to $ 2,101.
The data website CoinMarketCap cited a shutdown in the Chinese region of Xinjiang, which reportedly could drive a lot of bitcoin mining, for sale.
Luke Sully, CEO of digital asset treasury specialist Ledgermatic, said in an email that people “may have sold on the news of the emergence of electricity in China and not the impact that I really had on the net. “
“The power outage shows a fundamental weakness; that while the Bitcoin network is decentralized, mining is not,” Sully added.
Some analysts at the blog chain followed on Twitter on a large scale pointed to a sharp drop in the “hash rate” due to the disruption.
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 hash rate shocks don’t cause price falls. A reduction in the hash rate slows down transactions, which ironically makes it harder to move currencies to exchanges for sale. The recent price drop is within of the limits of typical volatility, as noise is not the signal, ”said Edan Yago, co-founder of Bitcoin-based decentralized finance protocol Sovryn.
The withdrawal in Bitcoin also comes after Turkey’s central bank on Friday banned the use of cryptocurrencies for purchases.
Edward Moya, senior market analyst at OANDA, said the cryptocurrencies had been ripe for a setback.
“The market has become overly aggressive and bullish on everything,” Edward Moya said. “It could have been any bearish headline that could have triggered this reaction.”
Many cryptocurrency markets operate 24 hours a day, 7 days a week, and serve as a basis for price changes at unpredictable hours. Historically, retail and day traders have driven the movements.
Despite the sudden sale, bitcoin has still increased by 89% so far in 2021, driven by its widespread acceptance as an investment and means of payment, accompanied by the rush of retail cash in stocks, publicly traded funds and other risk assets.
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