Cryptocurrency price correction expected after miners relocate

It will continue to trade at a fairly stable range for the next 1 to 2 months

by S BIRRUNTHA / Pic by BLOOMBERG

CRYPTOCURRENCIES, especially bitcoin, could be trading range bound in the next few weeks after the price volatility triggered by moves to manage the asset class in markets like the UK and China.

Tokenize Technology (M) Sdn Bhd founder and CEO Hong Qi Yu said for now, cryptocurrency will continue to trade at a fairly stable range for the next one to two months while the impact on price action from the curbing of cryptocurrency mining activity in China will be temporary.

“The move by China caused some downward price pressure but the transition of the miners to relocate is progressing fast. I anticipate that most of the major miners will find their new base by August this year,” he told The Malaysian Reserve (TMR) in a phone interview.

Hong believes by then, the price of cryptocurrency would have started to recover. Bitcoin was last trading at US$33,600 at the time of writing, well below its high of US$63,000 price in mid-April.

CoinGecko COO Bobby Ong told TMR it’s hard to predict the price direction of bitcoin but expects the unit to correct in the near term after its recent hard fall amid China’s crackdown on the digital asset.

To recap, China is cracking down on the cryptocurrency industry which has led to many traders selling bitcoin.

China has effectively stopped bitcoin miners from operating, including in areas using renewable energy such as Sichuan Province.

With China being the biggest bitcoin miner by hash rate, this has caused bitcoin to lose a large amount of hashing power.

Mining operators in China were forced to shut down and move their mining operations abroad.

China has also cracked down on leveraged derivatives trading on Chinese crypto exchanges such as Huobi.

The crackdown coincided with China’s Central Bank Digital Currency launch and the Communist Party’s 100th anniversary.

The UK’s Financial Conduct Authority (FCA) has also curtailed Binance’s operations in the country.

This is similar to Malaysia’s Securities Commission adding Binance to the Investor Alert List last year.

The UK’s FCA ruled that Binance offered very high leverage in its futures trading platform.