This past year brought with it several gains and record highs for cryptocurrencies’ value. However, now it is going through a rough patch and what we consider a crypto fall. The market is in danger. This doesn’t come as a surprise for many due to the fact that the market has gone through several occurrences that have led to this dangerous state.
We will now discuss some reasons as to why the crypto market is in such a state.
China has banned Crypto:
The Chinese government for several years has been thinking to put limits to the use of digital currency however the most recent limitation has outlawed all crypto transactions and mining within the country. They have shut down the Bitcoin mining that was in the Sichuan province as well as notifying local banks to refrain from accepting crypto transactions.
Exiled Chinese miners went to Kazakhstan, which welcomed them warmly after investing hundreds of millions of dollars in crypto mining since 2019. Kazakhstan’s government believed that its cheap and plentiful coal electricity, which is necessary for mining, would entice the industry and produce additional money.
Kazakhstan had become the world’s second-largest country (after the U.S.) for crypto mining before China restricted the industry in 2021. As of August 2021, the country was accountable for approximately 18% of the global bitcoin mining, according to CBECI. After their internet was shut down in early January during the uprising, Larry Cermak tweeted that 12% of Bitcoins computation power was done with.
Currently, the country’s internet connection has been restored and therefore the hash rate is back on track.
Stable coin Supply Increased:
Together with the crypto fall, stable coins have experienced a recent rise in supply. Stablecoin Supply Ratio displays the lowest value since July 2021, showing that stable coin supply is high compared to Bitcoin’s market cap and that investors are turning to that as a hedge against volatility.
Most crypto investors are concerned about the current crypto fall. The crypto fall is to continue in the near term and short-term. However, nothing like 2018 appears to be the theme.
Bitcoin and Ether Fall:
The BTC price went below that of $40,000 on Monday. This was the first occurrence of the price decreasing since September. It is now trading at $42,697 approximately 0.8% down. Ether also experienced a fall of below $3,000 and now trades at $3,269 down 2.3%.
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