Bitcoin’s latest price rise may be at least partially due to Chinese miners trying to trade their crypto for money in the face of a government crackdown on local exchanges, culminating in a supply shortage.
“The lack of supply has fed the trendiness of this rally extremely well, without any of the large sell-downs typical of mining activity in the past,” said QCP Capital, a Singapore-based trading company, on its Telegram channel.
With QCP’s understanding of the top crypto’s spectacular rally, it has soared past the $18,000 mark compared to $16,000 only a week ago. This is a little more prosaic than any of the other explanations where some observers point to macro factors such as the increasing need for a buffer against printing excess cash and consequent inflation, and the hunt for yield.
Like anyone else, miners working in China need currency. To cover their expenses, a significant part is energy prices. They place their bitcoin reserves on the market almost regularly, and their bills have to be paid in the local yuan currency. This means that miners are frequent buyers, and these sales influence the stock price.
Chinese miners, who own over 70% of Bitcoin’s hashing capacity, have failed to liquidate their crypto reserves for cash since their banks have frozen their bank accounts due to its national crackdown on telecommunications theft and money laundering through cryptocurrency.
QCP cited a blog named Wu Blockchain by a Chinese crypto watcher, who said 74 percent of the miners he surveyed could not cover their energy bills. According to a Google translation of his article, “There are also miners who said the mining machine had been shut down for a month because they cannot sell the currency to pay the electricity bill,” Wu emphasized. “Some OTC firms specializing in serving miners have also terminated their business.”
Thomas Heller, formerly a global business director at the F2Pool mining pool and now a chief operating officer of mining and media group HASHR8, reported the plight of Chinese miners earlier this week, saying that turning bitcoin and tether into cash has become a “challenge” for Chinese miners.
After the Chinese authorities started freezing bank accounts in June, the industry has had a difficult time, and its predicament is getting worse.
“Mining pools were selling large chunks of bitcoin in early September through exchanges, but this was hastily halted as their last remaining authorization off-ramp avenues were impacted with the arrest of large exchange heads like Star Xu and other [over-the-counter] brokers,” said QCP Money.
In the meantime, China’s Centre for Software and Business Growth has published its 20th ranking of crypto ventures under the country’s Ministry of Industry and Information Technology, Bitcoin.com reports where for example, Cardano ranked fourth from last and 8th in the global market. However, until transitioning to the third stage of the protocol known as “Goguen.” IOHK, the development team behind Cardano blockchain, is expected to unleash a hard fork to add some critical features.
Somewhere in December, the split will take place and enable the process for token-locking. It will allow users to keep tokens to complete a contract for a defined time. The Cardano team has been through two stages aimed at decentralizing its protocol. The third step is dedicated to new functionality being introduced.
In the meantime, ADA is caught in a triangular symmetrical pattern representing the high degree of volatility in the market. Increased uncertainty would result in the imminent breakthrough and define market momentum for the nearest future.
On the other hand, With Dash replacing NEO in the fifth position, the top four positions remain unchanged overall from the previous position. Bitcoin climbed to 11th place from 14th position, while Bitcoin Cash improved marginally from 30th to 29th place. IOTA also ranks the lowest.
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