Bitcoin nosedives 14% as pullback from record speeds up after Xinjiang power outage



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Bitcoin nosedives 14% as pullback from record speeds up after Xinjiang power outage

On Sunday, Bitcoin, the world’s largest cryptocurrency whose market cap had soared to a record $2 trillion last week, took a tattering header of as much as 14 per cent, rolling back much of its gains made over recent weeks as an intense selling pressure for crypto assets gathered momentum.

In point of fact, in the weekend's catastrophic downturn in Bitcoin’s market valuation came against the backdrop of a report from Data Website, CoinMarketCap, published late in the day that said the rancorous sell-off wave of bitcoin over the weekend, was largely prompted by a broad-based power outage in Xinjiang, China, a region known for powering a lion’s share of bitcoin mining across the globe.

Meanwhile, referring to a growing investors’ angst over the latest round of fallback in crypto assets from their record highs, a Chief Executive at digital asset treasury specialist Ledgermatic, said in an emailed statement following reveal of CoinMarketCap report, “People may have sold on the news of the power outage in China and not the impact it actually had on the network.

The power outage does expose a fundamental weakness; that although the Bitcoin network is decentralized the mining of it is not.

Bitcoin shrugs off a seventh of market cap

On top of that, as Bitcoin, the world’s most popular digital asset which had hit a record high of roughly $63,000 on Tuesday, had shrugged off nearly a seventh of its market valuation in a single session, some blockchain analysts were quoted saying in Twitter that there had been a large decline in “hash rate” due to the power outage, while “hash rate” could be defined as a gauge that determines the processing capacity of entire Bitcoin network while illustrating the amount of power required for miners to produce new Bitcoins.

Citing statistics, while this report was being prepared, on late-afternoon US trading hours, Bitcoin was trading nearly nine per cent lower to $55,682.8 after bottoming to a session low of $51,541 earlier in the day, while Bitcoin’s smaller rivals such as Ethereum and Litecoin were plunged as much as 8.25 per cent and 13.90 per cent respectively to $2,189.3 and $286.6.

Despite an abrupt weekend backlash, Bitcoin has still been up about 89 per cent in 2021 thus far, propelled higher over optimisms of a wider mainstream adoption as a feasible payment method amid harsh scolding from several G20 Central Banks.