Over the past few days, bitcoin has suffered somewhat, dropping in price from about $63,000 – the currency’s latest all-time high – to about $55,000 at press time. While many analysts believe that the currency has slipped due to exhaustion from the Coinbase listing on the Nasdaq, others feel differently, and point to other factors that may have contributed to the drop.
Bitcoin May Have Fallen Due to a Power Outage
Bitcoin has fallen by close to 20 percent over the past week, but according to Jason Deane of Quantum Economics, it has nothing to do with experiencing tiredness or anything of that nature from Coinbase. Apparently, it has more to do with a power outage in China that occurred not too long ago. In a recent interview, he claims:
A power outage in the Xinjiang region of China where a significant portion of bitcoin mining takes place caused a very sudden dip in the global hash rate which, in turn, caused transactions to back up and fees to rocket temporarily. Weaker hands interpreted this to be a major problem for the network and offloaded their bitcoin in quantities just sufficient enough to trigger a chain reaction of liquidations via automatic executions of stop loss (orders), thereby driving down the price very quickly.
According to crypto data analysis site, the cryptocurrency industry fell by as much as $1.9 billion, while other platforms such as Bybt say that the number is closer to $10 billion, with bitcoin accounting for nearly $5 billion of the total liquidation.
The Strength Has Increased
Men like Deane are not too worried about the drop, however, and claim that the recent event is proof of just how strong bitcoin has become. He states:
The domino effect was sparked by a market overreaction to what is essentially a non-issue. The extra irony is that the significant reduction in hash rate demonstrates just how resilient the decentralized bitcoin network really is. While a temporary outage of this size is extremely rare and can result in higher fees and longer processing times in the very short term, the network continues to operate perfectly and will readjust automatically in due course… It is certainly possible that in the medium to long term that levels of bitcoins held by institutions and perhaps even sovereign funds would lead to some price stability as many of the available coins would be ‘locked’ for long periods. However, we are not there yet. Bitcoin is still a very young asset, which is not always properly understood by some who trade it. Put simply, any perceived negative activity can create nervousness in some traders.
While assets like BTC are falling into deeper waters, others – such as popular meme coin Dogecoin – are rising to the surface. The asset has thus far jumped more than 400 percent following additional attention and many traders trying to turn April 20 into “Doge Day.”