China accounted for 65% of worldwide bitcoin production last year
After staging a mini-recovery at the beginning of June, bitcoin has crashed again, as the Chinese Communist Party ramps up its crackdown on mining and trading.
Bitcoin is down to $31,522 at the time of writing, from just under $41,000 two weeks ago, as Beijing called on major banks to reinforce the ban.
In May China’s cabinet, the State Council, pledged to come down on mining and trading in an effort to mitigate financial risks.
“People still react strongly to actions from China that create uncertainty so this is likely to reflect negatively on the bitcoin price,” said Ruud Feltkamp, chief executive officer at at crypto trading bot Cryptohopper.
“China is rolling its own cryptocurrency and has every incentive to have as little competition as possible … I think we will see miners leaving China and relocate where there is spare or cheap energy.”
According to data from the University of Cambridge, bitcoin mining in China makes up around 65% of worldwide production last year.
Since China makes such a high proportion of the world’s bitcoin, a change in regulations is capable of creating a massive swing in the price of the cryptocurrency.
Payment platform Alipay, owned by fintech company Ant Group, confirmed that its intention to implement a system to monitor major websites to track illegal crypto transactions.
Some analysts are saying that recent price movements mean the cryptocurrency may have officially seen the end of its bull market.
Bitcoin’s 50-day moving average recently crossed its 200-day moving average, a phenomenon known as the “death cross”, which has been known to precede heavy crashes.
Having said that, when it comes to bitcoin, a death cross can signal the the worst is over, as seen in 2017 and 2019.
Sotheby’s recently confirmed it will accept cryptocurrency as payment for a rare diamond which is expected to fetch more than £10m.