On Tuesday, the price of bitcoin dropped below $30,000 for the first time since January. The cryptocurrency has wiped out almost all the gains it had over 2021. There are numerous things putting pressure on the bitcoin price, one of the most significant being the regulatory crackdown globally, specifically in China.
The cryptocurrency fell over 12 percent on Tuesday and was selling at $28,824. This means that the price was almost half compared to the highs of April when bitcoin was selling for over $64,000. Underperforming bitcoin had an influence on the whole crypto trading market, with altcoins such as ether and dogecoin dropping significantly as well.
During the day, bitcoin managed to rebound to about $32,000. The cryptocurrency has been sliding for some time now, following the April rally. Bitcoin has already followed a similar pattern in the past, the most significant being 2017 when the price of bitcoin hit $20,000 for the first time. The last time this pattern was seen, crypto didn’t achieve new levels for nearly three years.
While several jurisdictions around the world have announced tougher regulations on crypto mining as well as trading, other countries are becoming more crypto-friendly. One of them is El Salvador, the president of which has recently announced that the country would make bitcoin a legal tender.
El Salvador even addressed the world bank for assistance, however, the proposal was denied by the world bank due to the highly volatile nature of the crypto market. On the other hand, the crackdown on crypto miners in China is affecting the market a lot.
China’s crypto crackdown
China has been a leader in crypto mining for a long time now. In fact, it is estimated that as much as 50 percent of all miners are from China. The crackdown in the country has a huge impact on the crypto market, as miners are looking for new locations.
The country announced its decision to ban crypto mining a few weeks ago. According to Chinese authorities, the main reason for the crackdown is the environmental impact of bitcoin mining.
The authorities of China said that the country, specifically the province of Sichuan, failed to meet the environmental goals set out by the government. The local authorities have blamed bitcoin mining for this. Sichuan has been one of the main hubs of crypto mining in the country.
Many have expected the local authorities in the province to be lighter regarding the crypto mining regulations, however, the province decided to follow the stance of the Chinese government.
Over 26 crypto miners in the region received a special letter from local authorities saying that they should have stopped mining by Sunday. The authorities also contacted the energy companies, telling them to stop distributing electricity to the crypto miners by Sunday.
Although there are some positive events happening around the world regarding the crypto trading market, China’s move outweighs all of the positive moments.
The leader of Facebook’s digital currency efforts, David Marcus, sees a positive side of the current crackdown, however. He says that China cracking down on mining is actually a great development for bitcoin. He added that due to China’s crackdown, mining will be largely moving towards western countries, specific jurisdictions with cheaper energy.
Crypto trading at its heights
It is safe to say that crypto trading has never been so popular before. There are millions of people around the world who are investing in cryptocurrencies, and one of the main reasons for their popularity is the easier access that people have to this market.
Modern crypto exchanges are making investments in this market a very simple task. In addition to this, there are also many software developers who are creating automated crypto trading bots that give investors the ability to trade crypto without spending hours researching the market.
For example, one such software is the Bistgap trading bot, which can analyze the ongoing events in the market and show traders how the prices could change. But this is not all, such trading bots are capable of trading crypto as well. They can automatically open buy and sell orders when the best market conditions arise.
The steps taken by the Chinese government come as the popularity of crypto trading increases. Although it is very bad news in the short term for crypto traders, this might actually be positive news for western countries in the long term.
On the other hand, it should also be noted that there are several other regulators that have started talking about the environmental risks that crypto mining has. Some regulators started arguing that the requirements for holding bitcoin and other cryptos should be higher than the requirements of holding conventional stocks and bonds.
Others have also discussed the environmental issues associated with bitcoin mining. For example, a few months back, Tesla’s Elon Musk talked about how bad crypto mining can be for the environment. The discussion went so far that Tesla halted receiving bitcoin payments for car purchases.