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Bitcoin Lost Nearly a Third of its Value in Seven Days
Bitcoin’s dreadful year appears to be coming to a disastrous end: The world’s largest cryptocurrency by market value dropped as much as 14 percent on Monday to $3,675 – and lost nearly a third of its value in the past seven days – as it’s suffered one of the worst weekly selloffs in its history.
Bitcoin has now plunged nearly 80 percent since hitting its record high of about $20,000 near the end of 2017, and is “within striking distance of the biggest cryptocurrency’s worst bear markets,” as Bloomberg notes. And because the entire cryptocurrency market essentially moves wherever Bitcoin pulls it, rival coins such as ripple and ether have also crashed, with CoinMarketCap placing the total market value for cryptocurrencies at $130 billion – a sharp drop from its record peak of $800 billion in January.
Per the Wall Street Journal:
Many speculators have fled the market, as shown by falling trading volumes. And a split this month in a smaller currency called Bitcoin Cash has created tensions. The prospect of large investors selling bitcoin to cover the risks of a fall in the value of their Bitcoin Cash holdings has hurt sentiment.
Now, another worry has emerged: Cryptocurrency miners, the outfits that solve complex equations to generate new digital coins, seem to be losing interest. The amount of computing effort expended by miners, known as the hash rate, has started falling.
Mao Shixing, founder of F2pool, the world’s third-largest mining pool, told Coindesk in an interview that between 600,000 and 800,000 miners have shutdown since mid-November across its network
Stepping back, Mao said there are multiple factors that contributed to the shakeout among miners, including the recent market decline that followed the bitcoin cash hard fork on Nov. 15; an increase in electricity costs in China; and the fact that Chinese manufacturers are still racing to upgrade their products, making older machines increasingly uncompetitive.
“All these factors are overlapping right now which led to this recent phenomenon,” Mao said.
As the winter comes in China, hydropower plants are experiencing a dry season when electricity costs have doubled from what they would have been in the summer when water was abundant.
Unfortunately, the general consensus seems to be that things will likely get worse before – or if – they get better for Bitcoin and other cryptocurrencies. Bloomberg notes “the current price of Bitcoin is still far below the trend line indicating the selling pressure will widen further, which could indicate further losses to come.”
Photo: Getty iStock