Another province in China suspends crypto mining - Kakiforex.com - Financial Market Media No. 1 in the World Another province in China suspends crypto mining Another province in China suspends crypto mining
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July 15, 2021

Another province in China suspends crypto mining

 The quotes of the main cryptocurrency continue a systematic decline to the dangerous levels of $31,100 and $29,700 per coin. In principle, given that bitcoin has not yet overcome these levels, it can be concluded that large investors are keeping bitcoin from a new fall with the last of their strength. But will they have enough strength in the end? It has already been mentioned previously that about 50% of investments in bitcoin come from private and retail traders and investors. Therefore, investors are not ready to keep bitcoin on their balance sheet for many years in order to use it as a long-term investment like stocks. They are interested in short-term profit (the time to keep the transaction open for up to a year). Thus, when the value of the cryptocurrency begins to fall, they immediately begin to sell their coins, fearing an even greater decline in quotes and receiving losses instead of profits. And bitcoin can fall no worse than it can grow.


It can be recalled that the two previous upward trends, in which BTC set value records, ended with a drop of up to 90%. Therefore, we continue to consider the option with a further fall as the main one. At the moment, the quotes have fallen to the level of $32,600. Meanwhile, new important news has arrived from China, which can further lower the rate down. In Anhui Province, all mining farms will be closed due to power outages. This cannot be considered surprising news, since, according to various estimates, up to 90% of miners in China have already stopped their activities. Also, the State Electricity Company of China announced the need to completely stop mining cryptocurrencies. Thus, there is no doubt that the ban on mining in China is not a temporary action of the government against digital assets. Of course, almost all large miners will simply transport their equipment to other countries that are more loyal to cryptocurrency mining. However, in the long term, this absolutely does not guarantee them a quiet life there.


Recently, rich and economically developed countries have taken a course to combat tax evasion by large corporations. For example, a single corporate tax will now be introduced in all countries of the world so that large corporations do not register their divisions and production facilities in countries with low and zero tax rates, thus not paying additional taxes in the countries where their headquarters are located. The same thing can happen with bitcoin over time. If the majority of large economic countries decide that bitcoin harms their financial stability (as in China), nothing will prevent them from issuing a decree that will restrict the functioning of the cryptocurrency sphere around the world. Thus, from our point of view, bitcoin will continue to become cheaper, and its prospects are not at all rosy.


Technically, bitcoin is again heading to the level of $31,100, which it has already worked out five times. Thus, in the coming days, the cryptocurrency will again test the strength of the levels of $31,100 and $29,700. From our point of view, overcoming these levels, and therefore a new drop in bitcoin, is only a matter of time. However, as long as these obstacles are not passed, "digital gold" retains the chances of growth to the level of $40,700. But this also requires the desire of investors to buy bitcoin, which is not yet observed.