During the day yesterday, the price of Bitcoin fell to a three-week low and the fact has been linked to some rumors that support the regulatory crackdown in the United States, as well as a possible massive blackout in the Xinjiang province. Is there any truth in those rumors? Did the drop have more to do with a power outage in China or was it something else? However, today, Bitcoin starts to recover.
The truth is that, during the recent weekend, Bitcoin (BTC) fell back to the terrain of $ 50,000 after having hovered above $ 60,000 for several days. With a drop of more than 12% in a few hours, Bitcoin went from $ 61,450 to a bottom of $ 53,354 yesterday. The collapse washed out other major cryptocurrencies, which also posted losses.
However, during the present day, the market for digital currencies appears to be recovering as analysts examine the possible reasons for the sudden price correction.
As well, we already mentioned, among the theories, some have indicated that the fact would be related to a massive blackout in Xinjiang province. One of the dominant areas for Bitcoin mining operations in China, which may have been the main factor behind the drop.
Massive power outage in China shuts down miners
And yes, the hashing power of the major Bitcoin mining pools located in northwest China appears to have plummeted. Due to a regional power outage intended to allow for safety inspections.
The hash rate or “hash rate” is the unit of measurement of the processing power of the Bitcoin network. This is a key security metric. The higher the hashing (computing) power on the network, the greater its security and overall resistance to attacks.
Other possible causes of the Bitcoin crash
Price and hash rate have always been correlated, argument statistician Willy Woo, pointing to a similar event from November 2017.
Meanwhile, some analysts pointed to in addition to this cause, rumors from anonymous sources that US regulators were about to accuse anonymous financial institutions of money laundering related to cryptocurrencies.
Coming to light just at the time of the price crash, the FXHedge Twitter account cited anonymous sources as a warning about regulators taking anonymous financial institutions to court for cryptocurrency-related money laundering.
No other details were given, but the tweet quickly earned more than 5,000 likes. And, almost the same amount of retweets, with the plummeting $ 52,000 below.
However, as of this writing, Bitcoin is starting to rebound. Thus taking up half of his losses to trade above USD 55,000. This is recorded by our internal Crypto Online tool.