Bitcoin crashes to $ 52,000 on Chinese miners shutdown and regulatory concerns

On the night from Saturday to Sunday, bitcoin broke through support at $ 60,000 and fell below $ 52,000. The reason for the collapse was the massive shutdown of miners and possible measures by the US Treasury

Another major correction in bitcoin after several months of almost continuous growth was caused by two factors at once. The massive shutdown of mining farms in China led to a slowdown in block creation and an increase in the queue of unconfirmed transactions in the mempool. At the same time, there were still unconfirmed rumors that American regulators could launch an investigation into unnamed large financial institutions for money laundering in cryptocurrencies. This led to a panic in the market and a massive liquidation of positions on the exchanges. Bitcoin was above $ 62,000 on Saturday morning, and set a local low of about $ 51,500 early Sunday morning.

Power outages in the Chinese province of Xinjiang, which led to the loss of many industrial miners from the network, began on Friday, but this effect fully manifested itself later. According to the statistics of the Bitcoin network, a little more than 100 blocks have been mined over the past day, and on Saturday evening this figure even dropped below 90, instead of an average of 144 blocks per day. Thus, the real hashrate of Bitcoin dropped by more than a third.

As a result of the slowdown in mining, the Bitcoin mempool (queue of unconfirmed transactions) has collected more than 100 thousand unconfirmed payments with a total “weight” of more than 80 MB. This size of the mempool is extremely rare, only in the event of severe shocks – for example, spam attacks on the blockchain or, as it is now, due to a massive shutdown of miners. Events like this, unfortunately, show the instability of the current mining system in the face of dramatic changes in hash rates and undermine Bitcoin’s reputation as a reliable independent payment system.

Rumors also surfaced today that the US Treasury will fine several unnamed financial institutions for money laundering using cryptocurrencies. Despite the lack of specific information, these rumors were enough to stir up panic among traders who have long awaited a reason for a correction.

U.S. TREASURY TO CHARGE SEVERAL FINANCIAL INSTITUTIONS FOR MONEY LAUNDERING USING CRYPTOCURRENCIES -SOURCES

— FXHedge (@Fxhedgers) April 18, 2021

The simultaneous influence of these two factors caused the collapse of bitcoin by more than 15% in a few hours, and after it the entire market collapsed. At the same time, a significant part of the movement occurred in just 15 minutes. According to Bybt, almost $ 10 billion worth of positions were liquidated on cryptocurrency exchanges, half of which fell on bitcoin. Cryptocurrency market capitalization fell below $ 2 trillion again, while bitcoin capitalization briefly fell below $ 1 trillion, but rose above that figure again on Sunday afternoon.

Now bitcoin is trading at about $ 54,500, but a quick recovery before the situation clears up and the end of both crisis factors should not be expected.