21 Jun 2021 Arjun Agarwal
Total Crypto Market Cap Drops Below $1.4 Trillion After A $100 Billion Sell-Off
The crypto sector is struggling hard to keep its positions, as the total cryptocurrency market cap collapsed below $1.4 trillion to a current level of $1.34 trillion. Weekly, the drop seems even harder, as on June 14 the total crypto market cap was in the $1.75 trillion zone.
Analysts pointed out several reasons behind the latest sell-off in the cryptocurrency market. The main culprit for the massive outflow is the industry leader – Bitcoin. The number-one crypto tumbled down from a weekly high of $41,295.27 to a current price point of $33,002.54 per BTC.
Source: CryptoBrowser
Michael Saylor, CEO of MicroStrategy, noted that “the dominant driver of Bitcoin right now is the crackdown on mining & trading in China that began in May.”
“This created a forced & rushed exodus of Chinese capital & mining from the Bitcoin network, a tragedy for China and a benefit for the Rest of the World over the long term,” Saylor added.
Indeed, Chinese authorities extended their crackdown on cryptocurrency in its southwest province of Sichuan, which resulted in over 90% of Chinese miners stopping operations.
The latest crackdown on cryptos in China began on Friday, June 18, as the Sichuan Provincial Development and Reform Commission and the Sichuan Energy Bureau issued a joint notice, `ordering local mining companies to “terminate” operations by Sunday, June 27.
According to the Chinese media outlet the Global Times, the notice concerns 26 companies that had been inspected and reported by Chinese authorities as “potential cryptocurrency mining enterprises.” The notice includes companies like Heishui Kedi Big Data Tech Co and Kangding Guorong Tech Co.
The mining ban caused Bitcoin’s price to go into a volatility spiral, which already happened in May when the Chinese state announced a ban on cryptocurrency dealings at domestic financial institutions due to volatility concerns. However, the actions by Chinese authorities included the shutdown of several crypto-focused social media accounts.
The latest crypto-related ban has accelerated the process of China-based miners migrating from the mainland to other areas like Central Asia and North America and Paraguay.
Meanwhile, Elon Musk, CEO of Tesla, made a series of critiques about Bitcoin and its environmental impact in the last few weeks. However, the latest Chinese crackdown might not ease Bitcoin’s carbon footprint, as the Sichuan province generates 83% of its energy from hydropower, meaning it’s using a renewable source of electricity.
The rest of the market reacted in conjunction with Bitcoin, as the altcoin leader, Ethereum, dropped 6.17% to a current price point of $1,954.34. Social media favorite, Dogecoin also fell 15.40% in one of its most vicious price drops and is currently trading at $0.2262.
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