Bitcoin: Crash Or Opportunity?
It’s likely that you have noticed bitcoin’s recent price drop, and the overall downward trend of the cryptocurrency market as a whole recently. This most recent crash has been fairly severe, with bitcoin’s 2021 return on investment being nearly wiped out after the worst quarter since Q1 2018. Estimates indicate that returns have fallen 45.91% this quarter following the Q1 2021 gains of 102.93%.
On Tuesday, June 22nd, the bitcoin price briefly dropped below $30,000, losing more than 20% of its value in just 6 days, a far fall from the all-time high of around $65,000 reached in April 2021. The question is, what caused this recent crash?
Bitcoin Mining In China
The general consensus in the industry is that this most recent crash has been caused by fear, uncertainty, and doubt (FUD) in the industry due to China’s recent crackdown on bitcoin mining. On Friday, June 18th, 2021, authorities in China’s southwest province of Sichuan ordered bitcoin mining projects to close.
In May 2021, the cabinet of China’s central government, known as the State Council, stated that it would be tightening restrictions on mining and trading as a measure designed to control financial risks.
Estimates have indicated that more than 90% of China’s bitcoin mining capacity has been shut down now that more provinces that have been considered cryptocurrency mining hubs in China have followed Sichuan’s lead. According to reports from inside Sichuan’s mining industry, some miners have suffered huge losses due to the new regulations.
How Much Bitcoin Mining Has Taken Place In China?
The reason that these recent developments are so important is that, until the recent crackdown, China was the epicenter of bitcoin mining. In fact, according to reports, China has accounted for 65% of the global bitcoin mining production. That’s why this shift in the geographic focus of bitcoin mining is being called a “seismic mining shift” and “the great mining migration” in the news, online in cryptocurrency forums, and on social media.
Where Are The Miners Planning To Go?
The rumor is that many of these miners may be moving to Texas where there is a substantial amount of wind and solar power.
Is China’s Attitude Toward Bitcoin Mining Different Than It Was Before?
Although bitcoin mining operations were only ordered to close in Sichuan and elsewhere in China recently, the government in Beijing has held a negative stance toward cryptocurrencies in general for years.
Ultimately, though, the new news caused a crypto selloff as cryptocurrency investors became fearful of the uncertain immediate future of bitcoin mining operations. Unfortunately, although the news directly impacted bitcoin since it concerned bitcoin mining, the selloff of bitcoin started a downward trend for other cryptocurrencies also which are often influenced by bitcoin’s price due to its presence as the cryptocurrency with the largest market cap.
China’s Crackdown On Bitcoin Mining: The Positive Aspects
The positive aspect of China’s crackdown on bitcoin mining is that even a policy restricting bitcoin mining developed by one of the world’s most powerful governments can’t stop bitcoin. The bitcoin network is still operating and holding strong against some governments that wish to reduce its influence.
Also, even with a crash, the cryptocurrency and decentralized finance space is not collectively seeking a bailout or assistance from centralized governments, because it doesn’t need one.
Keeping Recent Falls In Perspective
It’s important to keep in mind that we have seen downward trends in crypto prices before, like this one from May 2021, however as mentioned earlier, just in the previous quarter (Q1 2021) bitcoin gained 102.93%. So, it’s entirely possible that the cryptocurrency market could rebound just as quickly as it fell.
The VegaX Team’s Perspectives On The Recent Market Dynamics
Here are our perspectives on the recent market dynamics that have impacted the price of bitcoin:
- Bitcoin is a long-term hold asset that we continue to believe in. Historically, people who have viewed bitcoin in this way have benefitted from it.
- This is a great time to purchase more BTC given that it is now less expensive than it was in early 2021.
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VegaX Holdings: https://vegaxholdings.com/
VegaX Holdings is the “BlackRock” of the Crypto Asset Industry. We provide investors globally with one-stop access to sophisticated and secure crypto asset management. The asset management industry is the largest in the world representing more than $80 trillion dollars in investments through investment products like ETFs, mutual funds, and indices that outperform investments in individual stocks. VegaX is the first to create similar investment products for Crypto providing investors outperformance versus buying individual cryptocurrencies. On average, investors buying VegaX products make 30% more profit versus just holding Bitcoin.
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