Topline
Following a rise in prices that ushered in Coinbase’s highly anticipated market debut earlier this week, the cryptocurrency market plummeted early Sunday, after blackouts in China led to massive drops in bitcoin mining rates – soaring prices and sparking billions of dollars in liquidations.
The market is already on the mend but bitcoin prices are still down about 10%.
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Main Facts
A nighttime crash that started late Saturday caused the total market capitalization of cryptocurrencies around the world to rise by about $ 310 billion in less than 24 hours, causing the market to shrink from more than $ USD around 8 a.m. in the east of the day. 2.2 trillion to less than $ 1.9 trillion. data website CoinMarketCap.
As of 9:45 a.m. East, the market has rallied back to around $ 1.95 trillion, but bitcoin’s price – floating at around $ 54,750 – is still down about 10.5% in the past 24 hours.
Cryptocurrency liquidations during the flash crash totaled more than $ 10 billion, according to Bybt data, hitting their all-time high this year when bitcoin’s price dipped more than $ 10,000 below its latest high of nearly $ 65,000 on Wednesday.
Analysts held the sudden losses to a sharp drop of nearly 50% in bitcoin’s hash rate, which measures the total processing power used to mine the cryptocurrency and process its transactions, due to blackouts in the cryptocurrency. China’s Xinjiang region, home to one of the largest bitcoin mining networks in the world.
Caused by a coal mine explosion in Xinjiang on April 10, the blackouts took days to fuel bitcoin’s hash rate, which plummeted from a record high of over 215 exahash per second on Wednesday to around 120 exahash per second early Sunday.
Bitcoin’s price has fallen by about 12% since its hash rate started to decline, but is still up a whopping 750% this year.
Crucial quote
“Price and hash speed [have] always correlated, ”cryptocurrency researcher and former Forbes contributor Willy Woo said in a series of tweets on Sunday early Sunday, referring to a similar flash crash in November 2017, noting that once the hash rate started to normalize in both cases, bitcoin’s price also started to recover.
Main background
While heightened institutional adoption and inflationary concerns have taken the cryptocurrency market to new heights in the past year, bitcoin’s unyielding volatility has fueled concern on Wall Street that the token is an unreliable treasure trove of wealth. However, that sentiment can change. Dallas Federal Reserve President Robert Kaplan said Friday that despite bitcoin’s volatility, the token has proven itself as a store of value. “The challenge [with] bitcoin is how widely it will be adopted – at this point it is clear that it is a store of value, “Kaplan said.” Obviously, it moves a lot in value, so that could prevent it from spreading too far as a medium of exchange and wide acceptance. , but that can change and it will evolve. “
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