The crypto market leader, Bitcoin, took a tremendous price action this weekend after the BTC hash rate outage. Bitcoin plunged by more than $7,000 in less than an hour to a low of about $52K after an alleged crash in the mining hash rate.
After trading in a positive direction, hitting over $60K early last week, the week close for the crypto market leader saw the market close at $52,000 from $59,000, which is about a 10% drop in just a few minutes. This singular move has caused a huge liquidation in the market, which is worth about $10 billion in a day’s trading. This move came as a surprise after the market has experienced a positive trend in the past few weeks.
The Reason for such a Massive Bearish Reversal
According to analysis from reputable analysts, two circumstances could be the reasons why the fall happened after hitting its all-time high of $62,000 a few days ago.
The first reason could be the crash in hash rate caused by a shocking power outage in the Chinese Xinjiang province, which means a substantial number of BTC mining operations were on hold for a moment.
The second reason could be the rumour of the United States’ regulations relating to cryptocurrency, which is a result of a possibility of money laundering.
Bitcoin Hash Rate
Willy Woo, a popular Bitcoin Statistician, noted that the price of BTC often moves in the trend of the hash rate of the crypto. Based on his analysis, the dip is a temporary move, and the recovery of the crypto’s hash rate would mean the recovery of the price.
Nick Carter, the co-founder of CoinMetrics, noted a similar bias. He suggested that the power outage in Xinjiang province in China will not likely cause permanent and historic damage to the value of the cryptocurrency.
He said, “if the outage happens to persist for three weeks, there could be a difficulty for Bitcoin’s adjustment, but in my opinion, it is unlikely because it is either the power grid comes back on, or the miners will move their mining hardware in search of power.”