China May Be Key Crypto-Buying Market Again
Following a recent statement by the deputy governor of the Peoples’ Bank of China (PBoC), Li Bo, that they will henceforth see cryptocurrencies as investment alternatives, China seems to now have a change of tone towards cryptocurrencies which could boost locals’ crypto participation again.
The PBoC has been known for its hard line stance against cryptocurrencies in China. However, unlike in 2017 when China started introducing measures to crack down on exchanges carrying out crypto-related activities and banning initial coin offerings, this new shift in outlook could see China become a key crypto-buying market yet again as it was pre-2017.
“The main role we see for crypto assets going forward is investment alternative,” Bo said to CNBC. “And as investment alternatives, I think many countries including China are still looking into it and thinking about what kind of regulatory requirements, maybe minimal, but we need to have some kind of regulatory requirements to prevent (their) speculative nature.”
Chinese miners linked to Bitcoin price crash
Meanwhile, Bo’s statement comes as a coal mine in Xinjiang flooded and shut down over the weekend of April 17–18. Some market analysts have linked the mine’s shut down to what is now the largest daily drop in bitcoin’s hash rate in nearly four years and supposedly led to a Bitcoin price crash from around its all-time high of $64,000 to $54,000 over the weekend.
Bitcoin on-chain analyst, Willy Woo, claims that Chinese miners went offline about three hours into the difficulty adjustment – which happens every two weeks to match the natural increase in hash rate from miners and to keep block times to a steady 10 mins – adding that for those who want to “slow the network down, this is the best window to do so.”
While it was reported that over $300 billion of cryptos’ market cap was lost in just a few hours as a result, a crypto analyst Adam Cochran disagrees with the correlated Chinese mine’s shutdown saying it couldn’t have been the cause.
The idea that a power outage last night in a mining region in China led to the dip in $BTC is utter nonsense, just like the spurious correlation graphs above.
But even worse, when you run the math *there is no correlation*
— Adam Cochran (@adamscochran) April 18, 2021
“The idea that a power outage last night in a mining region in China led to the dip in $BTC is utter nonsense, just like the spurious correlation graphs above. But even worse, when you run the math *there is no correlation*,” he states.
Sharing from its weekly compilation, top crypto data analytics firm, Glassnode cites in a newly-released analysis that shows that short term holders (or STH-SOPR) have reset to the lowest value since the $29k dip in January. It says:
“This metric will trend higher (>1.0) when profits are realised and lower when coins are dormant or losses are realised (<1.0). This means some short term holders spent coins and took losses during this dip. However, it also means coins that are currently in profit were not shaken out. Historically, SOPR resets below 1.0 in bull markets have been constructive for price in the weeks that follow.”