China’s campaign to rein in crypto continued to ripple through the bitcoin network, sending the price of the largest cryptocurrency by market capitalization down 8% on Monday morning.
While Beijing’s crackdown on digital assets has been mounting for weeks, last Friday the Sichuan provincial government cut power to crypto-mining operations via the province’s state-owned utility. The move, which came into full enforcement Sunday, prompted a broad crypto sell-off amid talk of relocating mining rigs to central Asia and North America.
Five visuals help tell the story of China’s crypto crackdown and the market’s reaction.
Bitcoin’s price has plunged 20% in the last week
After piercing $40,000, bitcoin’s price began to ease midway through last week, partly on forecasts of earlier rate hikes from the Fed. But the gradual retreat accelerated on Friday as markets digested news of the Sichuan order.
Bitcoin’s “hash rate” fell sharply as Chinese mining power was booted offline
Bitcoin’s “hash rate,” a measure of how much computing power is supporting the network, dropped sharply over the weekend to a seven-month low.
The chart above from Blockchain.com shows the hash rate’s seven-day moving average, suggesting the weekend dip follows several weeks of decline. That coincides with reports of Beijing’s escalating pressure campaign against crypto-mining facilities. On June 9, for instance, the Xinjiang provincial government shut down several miners in an important regional crypto hub.
A robust hash rate is vital to the bitcoin security protocol that prevents any double-spending, and is generally seen as an indication of network health.
The global distribution of bitcoin mining activity seems to have shifted away from China
Activity from big Chinese mining collectives, known as pools, appears to have fallen in the wake of the Sichuan order. The data above, which come from BTC.com and were first noted by The Block, show all the major China-linked pools suffering steep hash rate falls on June 19 – a day after the Sichuan crackdown was announced.
Beijing-based AntPool’s hash rate fell nearly 20%, whereas the biggest American pool, New York-based Foundry USA, was down just over a percentage point.
The Sichuan crackdown coincided with a 13% drop in total crypto market cap
Most coverage of China’s harsher tack has focused on bitcoin, but the broader crypto market has not been spared. Per CoinMarketCap, the value of the entire cryptocurrency market is down 13% from June 18, wiping out some $200 billion in value.
The 13% decline figure also holds if you exclude bitcoin, which currently makes up about 45% of the total crypto market.
High correlation means few crypto safe havens during the sell-off
Major cryptocurrencies are falling into line as the market has begun to sell off. According to data from LongHash, nine of the most prominent cryptocurrencies – including ethereum, ripple, and bitcoin cash – have all become correlated with each other, making it difficult for investors to hedge one crypto bet with another.
The one exception is Tether, a stablecoin pegged to the dollar.