Did China Blackout Cause This Weekend’s Bitcoin Drop?
During the 2017-2018 Bitcoin bull run, which is by now known as the ICO bull run, there were many more corrections and falls for Bitcoin than there are during the 2020-2021 rise so far.
Just a few weeks ago, PayPal co-founder Peter Thiel claimed that China could use Bitcoin as a financial weapon against the US, and the action of this weekend lends itself to justify that statement exactly.
Allow us to explain.
14/15— 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*
Woo said that the initial sell off was:
Due to anticipation of miners going offline in China. Sell pressure was sufficient to trigger liquidation of short term speculator positions forcing price violently down.
Although the drop in Bitcoin was at first attributed to a group of whales coordinating an action to lower the value of the best known crypto in order to buy Bitcoin back at a lower price, by Sunday evening most onlookers admitted that the Chinese blackout was the main cause.
The Bitcoin Hash Rate is down 40% today, as a result of the Xinjiang blackout.— Charles Edwards (@caprioleio) April 17, 2021
One province in China represents a significant share of the Bitcoin network pic.twitter.com/G5BSSp8idY
Luke Sully, CEO of crypto firm Ledgermatic declared that investors:
May have sold on the news of the power outage in China and not the impact it actually had on the network.
The power outage does expose a fundamental weakness; that although the Bitcoin network is decentralized the mining of it is not.
With that, China in fact shows the true power it has over the network once again, namely that most of the mining power is located in one country, and that by a blackout, the Beijing government could (if it wanted to) drop the value significantly.
Summary:— Willy Woo (@woonomic) April 18, 2021
- Initial sell off due to anticipation of miners going offline in China.
- Sell pressure was sufficient to trigger liquidation of short term speculator positions forcing price violently down.
- Longer term fundamentals is very strong.
Data: @glassnode @bybt_com
If so, although no one is seriously stating that the Chinese government has caused an actual blackout in order to drop the price at this time, Beijing can indeed control future price movement if it wants to and Thiel’s comment could thus come true.
inmicco / Depositphotos.com