Summer recession: why bitcoin and Ethereum are stuck in the rut

In April, bitcoin was at a new record high of around $ 63,000. Then, within a few days in mid-May, cryptorynok collapsed. The price of Bitcoin has fallen by about $ 20,000. Ethereum has lost almost half its value, falling from an all-time high of $ 4356 to just over $ 2100. And the capitalization of the world kriptorynka has halved-from $ 2.5 trillion to $ 1.2 trillion.

“Just BTFD!”- called crypto enthusiasts at the start of the retreat, but after about two months, bitcoin and Ethereum are still recovering. BITCOIN has fallen 43% and ETH 33% since May 1, according to the Coingecko price index. The first two weeks of July did not bring much relief: bitcoin fell 8% and ETH fell 14%.

What keeps Cryptocurrency # 1 and # 2 depressed? Here are some of the main factors contributing to the decline, and why the situation still needs to stabilize.

Mining suppression in China
Long-running environmental problems related to energy consumption in Bitcoin mining led China to increase pressure on miners earlier this year. This is part of China’s commitment to reducing carbon emissions; it hopes to achieve “carbon neutrality” by 2060.

The provinces of Anhui, Henan, Gansu, Qinghai, Inner Mongolia, Sichuan, Yunnan and Xinjiang have imposed new restrictions on mining, and as a result, much of the global computing power behind bitcoin appears to be moving west. Chinese crypto startups are also considering leaving the country amid recent hostile events.

China has dominated the global mining industry over the past decade thanks to cheap coal and abundant supplies of hydropower. Some Chinese mining pools (large collections of mining machines that “combine” computer resources) lost more than a third of their capacity after the Sichuan government shut down the power supply of local miners.

The government campaign against miners is the main reason global heshreyt continues to decline.

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