The price of Bitcoin hemorrhaged this weekend, and it pulled down the entire crypto asset market – but this time, the cause may have been attributed to a high drop in hash rates.
Bitcoin fell 12.5% in a couple of hours this weekend, dropping from $61,450 to $53,750.
Monday morning Asian trading saw Bitcoin slightly recover, but now, analysts are checking to find out what has caused the event that led to $10 billion in liquidations.
Some think that the crash was caused by the rumors that the US Treasury Department is charging a couple of financial organizations with money laundering. On the other hand, others have checked on-chain to find out the answers, and it looks like the hash rates also took a dive – before the markets themselves did.
Willy Woo, an analyst and chart guru, has noticed that the single largest one-day drop in mining hash rate since November 2017 took place on April 17th. The hash rate on the network had basically halved, which created chaos for the Bitcoin price as it crashed.
The same plunge was also noticed by Bitinfocharts, which highlighted an almost record average hash rate of 157.58 EH/s to 105.43 EH/s, which represents the lowest level recorded since December 2020.
Willy Woo tweeted:
“We just saw the single largest 1-day drop in mining hash rate since Nov 2017. The hash rate on the network essentially halved, causing mayhem in BTC price as it crashed.”
Could China Be Responsible?
According to Woo, the hash crash happened as a result of a power outage in Xinjiang province, one of the most important areas in the world for Bitcoin mining. He also mentioned that this was known before the price crash, which happened on the 18th, as local news reported the power outage on the 15th.
Woo also declared that 9,000 BTC were sent into Binance the day after the power outage was announced, adding:
“I’d note that Binance serves volume from Asia more than the West. It’s likely this was sent in from a whale with closer knowledge to happenings in China.”
The analyst believes that the selling pressure of these two events combined was sufficient for the price to tip below liquidation levels around $59K which, in turn, led to a series of automatic sell-offs as stop losses were recorded.
As of now, Bitcoin has managed to recover to $57,500 during Asian trading.
Source: Cryptopotato.com