What the heck happened to my Bitcoin last week?
I’ve been taking some off the table since hitting all time highs, and loading up my BitPay Mastercard with some gains. I remember where Bitcoin was in March 2020. Around $5,000. I’m not scared yet.
What happened this past week, and can we blame China for it?
Bitcoin.com says that a blackout caused by a power plant in Western China shut out some Bitcoin miners. The source for them was a Chinese journalist named Colin Wu (@wublockchain) who had tweeted about electrical grid blackouts in Xinjiang. As a result, the computer networking power used to “mine” Bitcoins, known as the “hashrate”, fell by as much as 49%. So maybe we can blame China.
The co-founder of blockchain data aggregator Coinmetrics.io, Nic Carter also noted that Xinjiang was blowing up Bitcoin mining.
He said that the hashrate decline for Bitcoin shows just how much mining resides in China.
I’m fine blaming China for this past week’s sell-off.
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As of Sunday afternoon, BTC was up 2.28% and back over $50,000.
James Sparks, head of product at Bitpapa in Dubai, a crypto exchange founded in 2018, disagrees that China blackouts led to Bitcoin’s fall.
“Yes, it’s true that over half of the mining pools out there are set up in China. But individual miners can connect to a mining pool from anywhere in the world,” he says.
One of the biggest short comings of cryptocurrency investing is its high volatility. Many investors love volatility when the market is rising and they’re invested, but when Bitcoin goes the opposite direction, “things get ugly fast,” Sparks says. “Speculative sells and buys can be an excellent option when you are riding the trend.” Long-term investors also look for dips in pricing in order to buy at a discount.
Bitcoin first came to the market in 2009 and has risen from just $15 per coin to record highs of more than $60,000 in intraday trading just under two weeks ago. With the cryptocurrency market now being valued at over $2 trillion dollars, including non-BTC currencies, the investable universe has grown. One day, Bitcoin will be a smaller portion of the overall market than it is now.
For now, Bitcoin drives everything. If Bitcoin sells off, everything sells off. And the longer Bitcoin sells off, the stronger the headwinds for other cryptocurrencies, like Elon Musk’s favorite — Dogecoin.
In the most recent issue of Alpha Alarm, now a Forbes newsletter, Joseph Young spoke with some analysts from Whalemap — trackers of big money crypto investors. They said the smart money was holding (or HODLing, in crypto parlance, which means the same thing).
“We can see that a lot of new whale addresses being formed on the blockchain and HODLer behavior clearly indicates that they are not looking to sell at the moment,” Whalemap’s unnamed analyst told Alpha Alarm on April 23. “The general macro situation looks similar in many aspects to the beginning of the 2017 bull run.”
Side note: I noticed back in my Coinbase history that I had sold 1 full Bitcoin in 2018 or so for around $6,000. Had I…