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The past couple of weeks have seen tensions rise in the Crypto community as China continued to take an aggressive stance against Bitcoin and Crypto in general. If you were around in 2017, you will recall that they hit the market with a ban right in the middle of the bull market. How predictable, they have repeated their simple strategy yet again. Once again, it is well timed to hit the market mid bull run and hopefully create fear and destruction.
If you were around back then you will also recall that BTC did indeed conquer the FUD and continued on to reach new highs before topping out at 20K. It has also been a concern within the Crypto community that China controlled too much of the mining network, making it more centralized than decentralized. China's recent ban has only served to solve this problem that may otherwise never have been solved.
When you study the drop in hash rate relevant to the drop in price, you will actually find that BTC is holding up extremely well, considering the network has effectively just lost 50% of its hash rate. Most people do not see this, or factor it in to their assessment of the market. To be honest, most do not even know about this as a metric, or indication of price movement. When you consider that 80% or more of market participants have little to no knowledge of technical patterns and on-chain metrics, it is little wonder they are selling at these levels.
The hash rate is currently sitting at 104.04M as I am writing this article and bottomed yesterday at 102.06M, signifying a very modest rise of almost 2% after Chinese miners turned off their miners. In April the hash rate topped out at 200.00M, which means that the rate has been effectively slashed by 50% and may still drop further. Hopefully new players will see an opportunity to enter the market and will subsequently drive the hash rate higher. Certain miners will also relocate and come back online within the next few weeks or so. I expect a slow rise for the hash rate once it has truly bottomed out.
More Renewables & More Decentralization
Companies such as Celsius are beginning to invest in Bitcoin mining and all of these new projects are incorporating renewables. The energy concern recently triggered by Musk is actually a pathetic argument to be honest! However, the community is using it as a means to increase the shift to a completely green mining network.
It is also better that China make this move now, instead of later when the market is larger and more established. You want to see potential problems resolved in the infancy stage as apposed to further down the line. China has caused a momentary problem that will later have positive benefits. Significant drops in price also provide opportunity for committed Bitcoiners to increase their holdings, while weak hands get flushed out.
This in turn leaves us with strong hands, which is what is required to take the price to the next plateau. We may see further downside but there is a lot of support at 32K and even more support at 30K! A break below 30K would probably wick down to 25K before sharply bouncing back.
In any bull cycle, the price has never dropped below the previous all time high, which for us now is 20K. In reality, the worst may be over and we should remain focused and vigilant, as a shift is likely to take many by surprise.
I do like the idea to mine bitcoin or any other crypto with renewable energy. I am more or less doing to the same with a browser mining app. I do fire it up when our solar panels do produce more energy than we consume. Musk would be proud on me :)