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While the overall cryptocurrency market lost $300 billion dropping below the $2 trillion valuation, Bitcoin and the altcoin market each contributed a fall of $150 billion.
On Sunday, April, the overall cryptocurrency market tanked in a recent correction majorly led by Bitcoin (BTC) and other cryptocurrencies. Nearly $300 billion were wiped out from the crypto market as the overall crypto market cap slipped below $2 trillion.
On Sunday, Bitcoin (BTC) dropped to a sudden low of $52,000 after Bitcoin touched its all-time high above $64,750 last week on Wednesday. However, from yesterday’s low, the BTC price has gained 3.5% today moving back above $56,000 levels. At press time, Bitcoin (BTC) is trading at a price of $57,334 with a market cap of $1.07 trillion.
There have been two major theories behind the fall of the BTC price on Sunday. One of the unverified reports on Twitter claimed that the US Treasury Department is looking to crackdown on financial institutions. for the purpose of money laundering using crypto. One such tweet from FXHedge suggesting the possibility of a crackdown went viral on Sunday.
Blackout in China’s Xinjiang
Chinese mining regions have been facing major blackouts recently owing to the recent flooding and other security reasons. In this case, China’s Xinjiang region which hosts a majority of the Bitcoin miners faced a blackout for straight 48 hours.
Since the Bitcoin network went offline for a straight 48 hours, the Bitcoin hashrate collapsed significantly. As we know, hashrate is basically the computing power dedicated by the miners to the miners to the crypto network. Since the Bitcoin price follows the BTC hash rate, the BTC price correction also followed the drop in the Bitcoin hashrate.
Price and hash rate has always been correlated.
This is BTC price vs today's hash rate collapse (from the Xinjiang blackout). pic.twitter.com/mywEZLHlA0
— Willy Woo (@woonomic) April 18, 2021
Willy Woo also reminded his followers that there was a similar price-to-hashrate follow-up last time in November 2017. Nic Carter, the co-founder of Coin Metrics was also unfazed by what happened in Xinjiang. He also forecasted that the media interest in the event would be large. Carter writes:
“If the outage lasts 3 weeks then bitcoin will have a historically large difficulty adjustment but I think that’s unlikely – either grid comes back online or miners will move their hardware”.
Many market analysts suggested that it was a perfect time for the investors to buy. Along with Bitcoin, several other altcoins who hit record highs last week collapsed like a pack of cards. The altcoin market, in total, lost around $150 billion.