Last month, China’s central bank, the People’s Bank of China (PBoC), published a note that criminalizes virtually all cryptocurrency activity. When the banknote began trading online, the price of bitcoin (BTC) fell more than 6.5%. Soon, industry experts speculated that the news may have been the last opportunity to buy a dip.
The disintegration of cryptocurrencies in China began many years ago, and in July this year, the difficulty of mining bitcoins fell by almost 28% when miners began to emigrate from China after the government tightened control over mining and trading bitcoins. Due to the setbacks, the computing power that secures the Bitcoin network – the hash rate – has dropped by almost 50%. A recent note from the People’s Bank of China (PBoC) means that all remaining mining and exchange operations should be closed.
Fast forward to October and Bitcoin mining appears to be recovering. BTC hashrate has largely recovered from the downturn caused by the downturn in China, according to network analyst provider Glassnode.
A report from the Week On-chain company showed that both BTC’s hash rate and mining problems, which measure the competition among miners protecting the network, are on a “stable path to recovery.” The data shows that bitcoin hash rates are now approaching pre-exit levels while maintaining an upward trajectory.
Sasha Gobali, director of business and strategy for cryptocurrency data provider TheTie, told Cointelegraph about the rapid recovery:
“Many miners were buying hashish at prices from Chinese miners after the ban, which, along with increased institutional mining activity in the United States, could lead to a hash rate recovery.”
Gabali added that “the rapid recovery in the cryptocurrency market was mainly driven by the prospect that ETF futures will finally reach the market,” which will generate “intense buying pressure.”
Bitcoin’s price is believed to have risen earlier this month in response to growing rumors that such an ETF would be approved by the US Securities and Exchange Commission (SEC). Eric Balchonas, chief analyst at Bloomberg, said he is 75% confident that approval is imminent. The collapse of China appears to have had less of an impact on the market than the creation of a Bitcoin ETF in the United States.
Buy bitcoin whales at a low price
Blockchain data shows that big players have taken advantage of the drop in bitcoin prices due to the PBoC note to buy the drop and add more BTC to storage. Ki Yong Joo, CEO of cryptanalytics company CryptoQuant, tweeted that someone bought “up to $ 1.6 billion in BTC through market orders” in just five minutes on a central exchange.
In a speech to Cointelegraph, Pete Homeston, chief executive of Kraken Intelligence, a division of the popular exchange that analyzes network data, rejected China’s ban, saying:
Last month, for the 14th time in a decade, the Chinese authorities took tough measures against the cryptocurrency industry. It is possible that the markets are now completely setting prices for the campaign in China, with each subsequent announcement having less of an impact on spot prices. ”
Humiston said long-term coin holders have joined the whales to take advantage of the news, adding that the share of whale-owned bitcoins, defined as wallets containing more than 100 BTC, peaked at a new high of 11.88 million BTC in mid-September. …
The analyst noted that these wallets account for more than half of the total supply of bitcoins, adding that the continued accumulation has put pressure on the commercial supply of bitcoins, “making the asset vulnerable to a volatility surge with increased demand.” That helps explain the more than $ 50,000 increase, Homeston said.
He added that Kraken Intelligence found that while markets started selling in response to negative headlines from China, BTC has historically “grown more than 50% in the 90 days since.”
Whales and long-term coin holders may not be the only ones collecting BTC after the ban, as Glassnode data shows that the number of BTC addresses containing more than one coin has reached four months this week.
Marie Tateboit, head of marketing for the cryptocurrency exchange portal, told Cointelegraph that Federal Reserve Leader Jerome Powell’s announcement that the Fed has no intention of banning bitcoin could also lead to a capacity buildup.
Unique bitcoin addresses
While the recovery in bitcoin prices can be attributed to other factors, such as the US reaction to the cryptocurrency ban in China, the number of unique bitcoin addresses used on the blockchain has also increased.
It is impossible to determine exactly how many people are using Bitcoin, as any device can generate hundreds, if not thousands of addresses.