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Highlights of this week:
– Mining crackdown in China lowers prices
– BTC is down 50% compared to ATH
– The Crypto Fear & Greed index hits its lowest level
– Altcoins follow Bitcoin’s downtrend
Mining crackdown in China drives prices down
The volatility of the crypto market shows no signs of stopping. Since the beginning of June, the total market capitalization has fallen from just over 1.3 trillion euros to around 1.1 trillion euros, a loss of over 15%. The week was mostly colored red as the bitcoin crackdown in China escalated over the weekend, with authorities in hydropower-rich Sichuan province ordering crypto miners to cease operations. The southwestern province of Sichuan is home to China’s second largest mining community. More than 90% of China’s bitcoin mining capacity is reportedly shut down. It is believed that between 65% and 75% of all global bitcoin mining takes place in China. While this might not be good news for bitcoin miners in China, others could benefit. Chinese miners have already started moving their machines to other parts of the world to continue their operations. Chinese bitcoin mining company BIT Mining delivered 320 machines to Kazakhstan after being forced by the national energy regulator to shut down its center in Sichuan, while another company reported airlifting 3 tons of machines mining to Maryland, United States.
The total hash rate, or processing power of the bitcoin network, has fallen sharply in the wake of Beijing’s crackdown. In the past month, the hash rate fell from a record 180.7 million terahashes per second to around 116.2 million on Wednesday.
BTC is down 50% from ATH
The price of Bitcoin has remained limited in a downward range with a minimum of € 24,000. It is currently trading in a lower support area, 50% down from the April high of € 54,500, but still up around 15% year-to-date.
Even though the market turned bearish last month, data on the channel shows the biggest Bitcoin holders were not selling in the recent sell-off, but were net buyers. Most major and institutional investors did not sell when the market fell and some large companies, including MicroStrategy, bought the decline to increase their holdings.
Bitcoin’s long-term net holder position shows investors started ramping up activity in May as the price fell to € 25,000 from € 33,000. Millionaire addresses hit a seven-week high for the number of Bitcoin held, with addresses accounting for over 9.11 million BTC, down just a few percent from their peak in mid-April.
Crypto Fear & Greed index hits all-time low
A popular metric for measuring market sentiment, the Crypto Fear & Greed Index, fell to an all-time low this week. Since the Bitcoin crash in mid-May, which caused the entire crypto market to collapse, the index has tilted sharply downward, indicating fear in the market. In the middle of the week, the Fear & Greed Index hit 10, which represents extreme fear in the market. The behavior of the crypto market is very emotional. People tend to go greedy when the market is up which results in FOMO (fear of missing out on something). On the other hand, people often sell their coins when they see red numbers. The meter is on a scale from 0 to 100, where 0 represents extreme fear and 100 represents extreme greed.
Altcoins follow Bitcoin’s downtrend
Historical data suggests that during times of extreme market turmoil, most altcoins tend to closely follow Bitcoin’s price movements because they are deeply correlated. Ethereum’s correlation with Bitcoin dropped in early May to levels below 0.6 due to the price movements Ethereum made during this time. The one-month correlation was between 0.7 and 0.8 in April before falling to 0.5-0.6 in early May, but it rebounded drastically to 0.9 in early June and has held steady ever since. high levels.
The price of ETH moves to lower support from a falling coin, simply following the price of Bitcoin. Any reaction from the “big brother” will also move the price of Ethereum. Despite the decline from an all-time high reached in May, ETH is still up around 160% year-to-date.
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