BTC Market Uncertainty Intensifies After Algorithm Cutback, Then Mentions Strict Ban on Virtual Currency Speculation

Bitcoin arithmetic has fallen to its lowest level since early November last year, down 46% since its peak in mid-May this year and nearly decimated.

Following the introduction of regulatory policies for virtual currency mining in Xinjiang, Inner Mongolia, Qinghai and Yunnan, bitcoin mining powerhouse Sichuan has seen a 30% drop in Chinese mining pools’ arithmetic power with a single move. Since the evening of June 19, the overall crypto market has continued its downward spiral. However, the arithmetic power cut was just the beginning. On June 21, the People’s Bank of China interviewed some banks and payment institutions on the issue of virtual currency trading speculation, and many banks and payment institutions pointed out that accounts for bitcoin trading were prohibited, and the overall crypto market went down again, with the top 10 coins falling over 20% at one point and BTC falling below $32,000 for a short period of time, increasing market uncertainty.

BTC falls below $32,000
The recent plunge in the crypto market is related to a series of mining clearance policies, market profit-taking exit, and the bursting of some hype bubbles.

The first is that as the country continues to push forward with its crypto mining project retirement efforts, bitcoin arithmetic power has fallen to its lowest level since early November last year, down 46% since its peak in mid-May this year and nearly decimated.

According to Bitinfocharts, bitcoin arithmetic was once at 91.2 EH/s (latest data shows 104.693 EH/s), nearly half of its high of 171.4 EH/s six weeks ago, and mining profitability has fallen from a peak of $0.449/day/TH/s to the current $0.226/day/TH/s. Bitcoin Coin arithmetic has fallen to a near 8-month low, last falling below 90 EH/s on Nov. 3, 2020.

On June 20 BTC Browser data showed that bitcoin’s mining difficulty would be cut by 11.12%. on June 6 and May 30, the network recorded two difficulty cuts (-5.30% and -15.97%, respectively), with mining difficulty dropping from 25.046 T to 19.932 T in one month. bitcoin last saw three consecutive mining difficulty cuts in 2018 In December, the cryptocurrency market was in the midst of a miner-induced “death spiral” when miners shut down their machines and BTC prices fell rapidly, hitting a low of $3,125 on December 15, 2018, an 84% retracement from the December 2017 high.

In addition, another mention of the strict ban on virtual currency speculation makes the short-term market downside. the news on June 21 pointed out that the relevant departments of the PBoC recently interviewed some banks and payment institutions such as ICBC, Agricultural Bank, Construction Bank, Post and Reserve Bank, Industrial Bank and Alipay (China) Network Technology Co. on the issue of banks and payment institutions providing services for virtual currency trading speculation.

The relevant departments of the People’s Bank pointed out that the speculative activities of virtual currency trading disrupt the normal economic and financial order, breed the risk of illegal cross-border transfer of assets, money laundering and other illegal and criminal activities, and seriously infringe on the safety of people’s property. Banks and payment institutions must strictly implement the “Notice on Preventing the Risk of Bitcoin”, “Announcement on Preventing the Risk of Token Issuance and Financing” and other regulatory provisions, effectively fulfill their customer identification obligations, and not provide products or services such as account opening, registration, trading, clearing and settlement for related activities.

Participating institutions said that they will attach great importance to this work, and in accordance with the relevant requirements of the People’s Bank of China, they will not carry out or participate in business activities related to virtual currencies, further increase the efforts of investigation and disposal, and take strict measures to resolutely cut off the capital payment chain of virtual currency trading and speculation activities.

After the news came out, bitcoin fell below $32,000 in the short term to as low as $31,700.00.

Multiple Indicators Fall Market Uncertainty Increases
Along with the market decline, CoinShares’ weekly report showed another large outflow from digital asset funds, with most of the selling focused on bitcoin funds. Bitcoin funds have seen outflows for the sixth consecutive week. Specifically, outflows from digital asset investment products totaled $79 million last week, the third consecutive week of declines and the longest streak of outflows since February 2018. Outflows from bitcoin funds totaled $89 million, while outflows from ethereum products totaled $1.9 million.

In addition, total grayscale assets under management fell below $30 billion to $29.4 billion as of June 21 EDT. Bitcoin Trust (GBTC) traded at $27.70 per share, down 7.05% from the previous day, while Ether Trust (ETHE) traded at $18.78 per share, down 9.10% from the previous day.

Meanwhile, Glassnode data shows that Ether miners’ revenue just reached a 3-month low of $1,157,026.48. This follows a 3-month low of $1,171,824.27 observed on June 20.

Notably, data shows that $2.5 billion in bitcoin options will expire this Friday, also led by short positions.

CryptoQuantCEOKiYoungJu tweeted that the BTC market is very uncertain at the moment. Whale sell-off indicates a bear/fake bull market, while retail sell-off indicates a bull market. We are now in neutral, stop trading and wait patiently for the next volatility.

Interestingly, with the crypto market’s selloff accompanied by bearishness in the minority, Nassim Taleb, a former Bitcoin wannabe and author of the book “BlackSwan,” published a draft paper Sunday explaining his recent 180-degree shift in commentary on the asset. taleb said that despite the hype, Bitcoin has failed to meet “According to Taleb, bitcoin “can neither serve as a long-term or short-term store of value (its expected value is no higher than zero), nor as a reliable inflation hedge, and worst of all, it does not constitute, even remotely, an inflation hedge. It does not constitute, and is far from constituting, a tail protection tool against catastrophic events. This is a far cry from his view in 2017, when Taleb wrote the foreword to “The Bitcoin Standard,” a book that demonstrated that Bitcoin was a new form of sound money, which Taleb wrote was “a brilliant idea.

In addition, veteran analyst and cryptocurrency trader Peter Brandt said he now prefers to hold cash over bitcoin and cryptocurrencies. Brandt added that as long as the dollar is bullish, other assets, including cryptocurrencies, could take a hit.

A new bitcoin bear market has been confirmed, said YoungJu, CEO of on-chain analytics firm CryptoQuant. He noted that large holders have started sending large amounts of tokens to exchanges, a sign of “whale surrender.

Buying Power Still Exists?
Despite the market’s near-decline from its peak in previous months, there is still no shortage of buyers in the market.

On June 21, MicroStrategy CEO Michael Saylor announced on Twitter that MicroStrategy had purchased another 13,005 bitcoins for $489 million in cash at a unit price of $37,617. As of June 21, 2021, MicroStrategy owned 105,085 bitcoins with a total value of $2.741 billion at an average price of $26,080 per bitcoin.

According to OKLink data from Eurotech Cloudchain, as of 10:00 on June 22, 2021, the number of BTC held by PurposeBitcoinETF reached 20,729.30, with a new position of 508.24; the number of ETH held by PurposeEtherETF reached 58,604.86, with a new position of 1,514.10.

In addition, coindesk pointed out that Digital Currency Group (DCG), the parent company of Grayscale, will purchase $50 million Grayscale ETC Trust. However, DCG has no response to this for now.

Miners are also surviving out at sea. a CNBC reporter noted that Chinese logistics companies are airlifting bitcoin miners to Maryland, U.S. On June 21, Bit Mining also announced that the first batch of 320 miners arrived in Kazakhstan, with a total computing power of about 18.2 PH/S, and are expected to be deployed and operational by June 27. According to the plan, the second and third batches of 2,600 mining machines are expected to arrive in Kazakhstan by July 1, with a total computing power of approximately 102.3 PH/S. The second and third batches of 2,600 mining machines are expected to arrive in Kazakhstan by July 1, with a total computing power of approximately 102.3 PH/S.

Su Zhu, CEO of Three Arrows Capital, recently said on the podcast, “The pullback, while brutal, doesn’t necessarily indicate that the whole market is over, so I think the bull market is definitely not over, in a way that allows institutional investors to enter the market and participate, as Goldman Sachs previously announced plans to offer clients with ethereum futures and options, and many of their clients see this pullback as a good opportunity to get in.” He went on to say that despite the recent spate of bearish news, that’s not the entire reason for the pullback, and that the market did pull back at this point in profit taking, but there is still plenty of buying demand.

For now, though, bitcoin is still struggling near $30,000, and it remains to be seen whether it will be able to break through that resistance level in the near term or probe for lower support.

Posted by:CoinYuppie,Reprinted with attribution to:
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