Bitcoin (BTC) Will Rise Despite the Decisions of the Chinese Authorities

Bitcoin (BTC) Will Rise Despite the Decisions of the Chinese Authorities

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The bitcoin rally is rolling on, but the share of BTC in the cryptocurrency market is decreasing. This happens due to the decision of the Chinese authorities to ban mining. Even after recovering the mining difficulty and miners relocating, Bitcoin Dominance did not recover.

The mining difficulty in two weeks increased by 7%, in 3 weeks from the beginning of August by 13%. Experts attribute this to the recovery of mining after miners left China. However, the difficulty score still hasn’t peaked at 25 terahash (trillion hashes), which was set in mid-May, a month after the price of BTC hit its all-time high (ATH) at $64.8K. The correlation between the price of BTC and the mining difficulty has been noted by analysts for a long time.

After the mining ban and the network hashrate drop, the bitcoin price dropped below $30K in June. Now the difficulty is increasing, and the price of BTC is also moving up. However, it cannot be assumed that restoring the hashrate and increasing the complexity of mining guarantees the rise of BTC. The fundamental factor which can back the rise in the price of BTC is the growing interest from financial players and institutional investors in cryptocurrencies in general and in the leading cryptocurrency in particular.

The decisions of the Chinese authorities against cryptocurrencies cannot be accidental. China never acts thoughtlessly. Perhaps China is about to clear out the cryptocurrency market before the launch of the digital yuan.

Earlier, a test launch took place in four major provinces. The testing of the national digital currency has been a success, according to Chinese authorities. The full launch will take place at the Winter Olympics in Beijing, which begins on February 4, 2022. Exactly six months before that date, an attack on cryptocurrencies and bitcoin happened. With the help of the digital yuan, China expects to become a leader in the cryptocurrency market and, possibly, weaken the dollar’s hegemony in international settlements and strengthen its position in the trade war with the United States.

However, there is currently no evidence that bitcoin is about to leave the scene. Despite a slight decline in Bitcoin Dominance, bitcoin has a strong position in the market. This confirms the information of the analytical agency Santiment: BTC is being withdrawn from exchanges in large quantities. The number of bitcoins on exchanges has now hit a minimum in more than 2 years. Santiment notes:

– The ratio of BTC on exchanges has now fallen to its lowest point since June, 2019. This 26-month low should be viewed as a bode of confidence for holders of bitcoin, as large exchange selloffs are less common when less supply is at risk on exchanges.

China can no longer influence the cryptocurrency market with its bans. But it is possible that measures will be taken to back digital yuan in near future, and these measures should be expected in the fall.