Bitcoin price is struggling to recover from the $3,800 region. Earlier today, on September 22, bitcoin price fell by 7.35 percent from $3,750 demonstrating early signs of recovery on Wednesday.
The entire cryptocurrency market endured a major price correction as leading cryptocurrencies including bitcoin, Ethereum, Bitcoin Cash, Litecoin, and Monero all recorded over 7 percent decline in value over the past 24 hours.
Potential Factors of Bitcoin Price Correction
Although the global bitcoin exchange market has recovered from the imposition of a nationwide ban on bitcoin exchanges by the Chinese government to an extent, the bitcoin market still remains concerned over the uncertainty of the Chinese bitcoin industry. Particularly, rumors on the potential ban on bitcoin mining centers and mining industry surfaced, and key players within the Chinese bitcoin mining industry such as ViaBTC CEO Haipo Yang explained that the Chinese government’s crackdown on bitcoin mining industry could lead to the demise of Chinese miners.
“Technically, China can’t ban bitcoin traffic, we have our own sync network. But if China gov say mining is illegal, we are fucked,” said Yang.
Throughout the past week, several leading figures in both the Chinese and global bitcoin industries including Bitmain co-founder Jihan Wu, security expert John McAfee and Litecoin creator Charlie Lee have stated that there is no truth to the Chinese government’s potential ban on bitcoin mining. Lee wrote:
“I have a trusted source that says that there’s no truth to China banning mining or network. For your information, I haven’t made any trades on this info. The FUD is propagated by large manipulators trying to make money shorting. They know that China ban FUD works and cannot be proven wrong. Take it for whatever it’s worth, but I have not traded this and have no plans to buy or sell in the near future.”
If large manipulators are in fact attempting to bring the price of bitcoin down for the purpose of shorting by circulating false news on the Chinese government’s supposed intent to ban bitcoin mining, it is definitely working. Uncertainty in China remains a large factor to the recent price correction of bitcoin. Even though the Chinese bitcoin exchange market was not a major market to begin with as it only accounted for 10 to 13 percent of global bitcoin trades prior to the ban, the bitcoin mining industry of China is accountable for a large portion of the global bitcoin hash rate.
But, the structure of the global bitcoin mining industry is starting to change rapidly. Multi-billion dollar technology conglomerates in Japan have started to allocate hundreds of millions of dollars in manufacturing bitcoin mining equipment and establishing large-scale mining centers. Hence, in the long run, the deviation of hash power from China to Japan and other regions such as South Korea and the US will not be a major factor and indicator of bitcoin price trend.
More to that, several analysts and news publications including Zerohedge have reported that the recent price correction of bitcoin can be attributed to JPMorgan CEO Jamie Dimon’s baseless criticism of bitcoin and its lack of intrinsic value. The vast majority of sensible investors and traders understand that the concept of intrinsic value is fundamentally flawed; the value of all assets, currencies and companies are completely subjective and thus, Dimon nor any other bankers are not in a position to depict the value of bitcoin in any way.
Also, it is far-fetched to link Dimon’s comment on bitcoin to the digital currency’s decline in price. Dimon has remained skeptical toward bitcoin since 2013 and his perception of it has not changed. The market has become resilient to falsified information and unjust analysis from financial analysts and bankers with the lack of knowledge in the structure of bitcoin and cryptocurrencies.
As the market continues to recover from China and the Chinese government offers more clarification regards to the short-term future of bitcoin miners, bitcoin price will likely recover.
Featured image from Shutterstock.
Last modified: June 12, 2020 3:55 PM UTC