Bitcoin has unexpectedly crashed – Willy Woo Na on-chain analyst believes that the crash may be due to a significant power outage in the Chinese mining hub Xinjiang. His analogy makes sense as most bitcoin mining in the world is done there. From research done by the Cambridge Bitcoin Energy Consumption Index (BECI), the mining hub is responsible for a quarter of the total global hash rate.
There have been many blackouts last week, mainly due to local flooding. There had to be a power outage as a safety measure to inspect a coal mine where 21 miners were trapped underground due to power and communication breakdown.
Since November 2017, yesterday was the most significant drop in Bitcoin hash rate, from about 172 million terahashes per second, or TH/s, to less roughly 154 million TH/s, according to Ycharts.
Willy Woo connects the drop in hash rate to the Chinese power outage.
Heavy selling in the futures market
Surprisingly, those with market information anticipated the drop, and there has been significant selling in the futures market before the fall. In Binance, there is 9000 BTC transferred on April 16, which is linked to a whale who was well informed of the Chinese situation.
There has been a downward momentum drive that led to the liquidation of bitcoin worth $4.9 billion and 4.4 billion in margin calls in the altcoin ecosystem. There is a record of about 1 million accounts that were liquidated.
There are still those who do not believe that the power outage in Xinjiang was the primary reason for the drop-in hash rate. According to Adam Cochran, a Cinneanhaim Ventures Partner, there is no way the drop in hash rate was caused by a power outage last night.
As is expected, some investors have taken advantage of the dip to stock up on their BTC reserves. Many long-term whales are heavily buying BTC since it got to the $50K level.
According to Woo, it is evident that many investors validate BTC as a trillion-dollar asset, and that is why Bitcoin’s capitalization is currently over $1 trillion. He also added that 13.5% of the total BTC supply had been moved on-chain.