Why Bitcoin tumbled 10% after $64,000 ATH

Source: The Guardian

After reaching a record high of $64,869.78 last Wednesday ahead of the stock market listing of Coinbase on the NASDAQ, Bitcoin tumbled over 10% Saturday in its single-day largest drop since February, according to Business Insider.

According to Business Insider, Bloomberg reported that bitcoin fell 10.8% in the 24 hours to Saturday 7am ET, from $61,396 to $54,750. At one point, it reached a low of $51,300 after it dropped more than $7,000 in a single hour, before partially recovering.

Bloomberg, Coinbase, and other sources are reporting that the most-priced crypto asset in the world nose-dived amidst speculations that the United States Treasury Department "may take action against money laundering conducted through digital asset".

Some other countries have already initiated similar moves. 

In Nigeria, the Central Bank took action early February banning banks from transacting with crypto exchange platforms, and ordering them to flag any bank accounts which carry out cryptocurrency transactions in the country.

The Nigerian apex bank issued the order through a circular, warning banks that facilitating payments for cryptocurrency exchanges is prohibited, and adding that they needed to identify and close accounts associated with them.

While that move by the Nigerian government was met by a backlash from its large and youthful population of crypto enthusiasts, it clearly echoed their frustration—how to regulate the increasing volume of transactions, especially money laundering, being perpetrated through the anonymity of digital assets.

Critics slammed the move as one in bad faith against the whims of innovation. 

The Nigerian government isn't the only one that seems frustrated by this. According to Business Insider, Turkey's central bank said on Friday that it would cease the use of cryptocurrencies as a valid form of payment from April 30. The move reportedly caused bitcoin to slip as much as 5%.

This comes even as more and more companies, including Tesla, PayPal, Xbox, and others have announced they are adopting select digital assets (mainly bitcoin) as acceptable forms of payment for their products.

Also, in March, it was reported that India was likely to ban bitcoin and fine anyone who buys, holds, or sells any form of digital currency.

As the largest economy in the world, it remains to be seen how a potential slew of government regulations on bitcoin may impact the use of cryptocurrency if eventually announced.

Important Update

Forbes and Nasdaq are reporting that the sudden and sharp losses in Bitcoin are as a result of a stark nearly 50% decline in bitcoin's hash rate, which measures the total processing power being used to mine the cryptocurrency and process its transactions, as a result of blackouts in China's Xinjiang region, which is home to one of the biggest bitcoin mining networks in the world. 

Caused by a coal mine explosion in Xinjiang on April 10, the blackouts took days to tank bitcoin's hash rate, which plummeted from an all-time high above 215 exahash per second on Wednesday to about 120 exahash per second early Sunday.

Sources: Business Insider, Bloomberg, Al Jazeera, Forbes, Nasdaq