Over the last week, the collective cryptocurrency market has shed tens of billion of fiat dollars in value. Yesterday, bitcoin briefly turned negative on the year, before rallying later in the day. As of press time, the leading cryptocurrency’s price stands at ~$34,000, while ether is ~ $2,000. The coins are down ~13% and 18%, respectively, on the week.
The catalyst/culprit (choose your fighter)
Driving the news (and, ostensibly, the sell-off) is a fresh set of anti-crypto measures in China. On Sunday, authorities in the regions of Sichuan, Yunnan, and Inner Mongolia cracked down on crypto miners by ordering them to cease operations. In some cases, officials told utility operators to cut the power supply to mining farms.
The next day, the People’s Bank of China directed payment processors and other financial institutions to restrict services on anyone trading, using, or hodling cryptocurrencies. This isn’t exactly new news, but rather the continuation of a trend already underway. Why the crackdown?
- It’s difficult for the state to exert control over decentralized blockchain technology.
- China is rolling out the digital yuan, its own CBDC (central bank digital currency).
And that’s not all
The crypto market has been flashing warning lights of exuberation and market excess for some time. These signs include, but are not limited to:
- A dog cryptocurrency with no utility rocketing to a $3+ billion market cap. We’re talking, of course, about Shiba Inu. Dogecoin, the OG dog meme crypto, is down by roughly 67% from its all-time high (but it’s up 40% over the last 24 hours).
- QB Tom Brady changing his Twitter avatar to the crypto in-crowd signifier, laser eyes
- Nasty technical indicators, like the “death cross,” that have appeared in trading patterns
We know better than to try and predict what comes next, but as we wrote earlier this month, a crypto winter may be coming. These cyclical phases tend to shake out less serious blockchain development projects, while more dedicated teams keep on building.
Zoom out: One in five US adults say they own crypto, per Morning Consult data published yesterday. That number may have dropped since the survey was conducted, since not everyone has diamond hands.
Still, familiarity with crypto is on the rise. From January to June of this year, the amount of US adults who say they’re familiar with crypto rose from 30% to 37%, per Morning Consult.—RD