cryptocurrency: Why China may be the ‘reason’ crypto currencies are in a slump – morningtidings

It seems like a slew of negative stories have led to crypto currencies in a slump. According to a report by CNBC, the trading values at some of the largest exchanges have dropped 40% in June. The report cites data from CryptoCompare, a crypto market data provider, that suggests trading volumes at Binance, Kraken, Coinbase and Bitstamp have reduced due to lower prices and lower volatility.
The report says that the price of Bitcoin was down by 6% and hit a monthly low of $28,908.
The China factor in cryptocurrency
As per a report by Reuters, China has been making an attempt to crackdown on the crypto industry. And it seems like it has finally made an impact. The fear of a Chinese crackdown may have led to fear in the market, which is why it has gone in a slump like situation.
China is gearing up to launch its own state-backed digital currency. This has led to mining operations in the country to close down. Almost 50% of bitcoin’s mining power was hosted by these operators in China.
The Chinese government had announced tougher restrictions on cryptocurrency in May. A report by Nikkei says that mining is an energy-intensive process which is not in tune with China’s pledge to achieve carbon neutrality by 2060.
The Chinese crackdown on bitcoin as well as crypto mining has forced many using high-powered computers to secure the bitcoin network and validate transactions out of the country to other locations like Kazakhstan among others. Bitcoin’s hash rate — a measure to check how much computing power is being used by bitcoin network — has fallen down to a 13-month low over the last few weeks, according to a report by Forbes.
It’s not just the bitcoin network which has seen a crash. The ethereum — other most popular crypto network — has seen its hash rate drop by 20% in the last two months.