After a price spike that ushered in Coinbase’s long-awaited market debut earlier in the week, the cryptocurrency market fell early Sunday after power outages in China led to a massive drop in rates. Bitcoin mining – driving down prices and spurring billions of dollars in liquidations.
A nighttime crash that began on Saturday night caused the total market capitalization of cryptocurrencies around the world to drop to around $ 310 billion in less than 24 hours, pushing the market down from more than $ 2.2 trillion to less. $ 1.9 trillion at around 8 a.m., according to crypto data website CoinMarketCap.
At 9.45 a.m. EST, the market climbed back to around $ 1.95 trillion, but the price of bitcoin – floating around $ 54,750 – is still down about 10.5% over the course of the year. the last 24 hours.
Cryptocurrency liquidations during the flash crash totaled more than $ 10 billion, according to Bybt data, peaking this year as the price of bitcoin fell more than $ 10,000 below its last high of nearly $ 65,000 on Wednesday.
Analysts pinned 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 power outages in the China’s Xinjiang region, home to one of the world’s largest bitcoin mining networks.
Caused by the explosion of a coal mine in Xinjiang on April 10, power outages took days to reduce the hash rate of bitcoin, which fell from a record high above 215 exhash by second Wednesday at about 120 exahash per second early Sunday.
The price of bitcoin has fallen about 12% since the hash rate started to drop, but it continues to climb 750% this year.
“Price and hash rate [have] always correlated, “cryptocurrency researcher and former Forbes contributor Willy Woo mentionned in a series of Sunday morning tweets, referring to a similar flash crash in November 2017 and noting that once the hash rate started to normalize in both cases, the price of bitcoin also started to recover .
While increased institutional adoption and inflationary concerns have taken the cryptocurrency market to sky-high new heights over the past year, bitcoin’s unwavering volatility has raised concerns on Wall Street that the token is an unreliable reserve of wealth. That feeling, however, may be changing. Dallas Federal Reserve Chairman Robert Kaplan said on Friday that despite bitcoin’s volatility, the token has proven itself as a store of value. “The challenge [with] Bitcoin is the extent to which it will be adopted – at the moment it is clear that it is a store of value, “Kaplan said.” It obviously changes a lot of value, which may prevent it from spreading too far. as a medium of large-scale exchange and adoption. , but that can change and it will evolve. “
Bitcoin mining hash rate drops as blackouts instituted in China (Nasdaq)
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