/https://specials-images.forbesimg.com/imageserve/607c44b78cc69e0d0496a8cd/0x0.jpg?cropX1=0&cropX2=960&cropY1=0&cropY2=540 "Crypto Flash Crash wiped out $ 300 billion in less than 24 hours, fueling massive Bitcoin liquidations")
Top line
Following a run-up to prices that ushered in Coinbase’s long-awaited market debut earlier this week, the cryptocurrency market fell early Sunday after power outages in China led to massive declines in bitcoin’s mining rates – the price of billions and the use of billions of dollars in liquidations.
The market is already recovering, but bitcoin prices are still about 10% lower.
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Key facts
An overnight collapse that began late Saturday seized the total market capitalization of cryptocurrencies around the world by less than $ 310 billion in less than 24 hours, shrinking the market from more than $ 2.2 billion to less than $ 1.9 billion by about 8 hours East, according to crypto-data website CoinMarketCap.
From 9:45 a.m. in the East, the market climbed back to about $ 1.95 trillion, but the price of bitcoin – which is hovering around $ 54,750 – has continued to fall by about 10.5% over the past 24 hours.
According to Bitbt data, the liquidation of cryptocurrencies during the flash crash amounted to more than $ 10 billion and reached their highest levels this year, as the price of bitcoin fell more than $ 10,000 on Wednesday below the latest high of almost $ 65,000.
Analysts have attributed the sudden losses to a sharp drop of almost 50% in the hash rate of bitcoin, which measures the total processing power used to exploit the cryptocurrency and process its transactions due to blackouts in the Xinjiang region in China, which is home to one of the largest bitcoin mining networks in the world.
Due to an explosion of coal mines in Xinjiang on April 10, the disappearance took days to refuel the hash rate of bitcoin, which dropped from an overall high above 215 exahash per second on Wednesday to about 120 exahash per second early has.
The price of bitcoin has fallen about 12% since the hash rate started to fall, but is still a staggering 750% this year.
Important quote
Price and hash rate [have] has always been correlated, “said cryptocurrency researcher and former Forbes contributor Willy Woo said in a series of early tweets on Sunday, citing a similar flash crash in November 2017 and noted that once the hash rate began to normalize in both cases, the price of bitcoin also began to recover.
Important background
Although increased institutional adoption and inflationary concerns have lifted the cryptocurrency market to meteoric highs in recent years, bitcoin’s steadfast volatility has fueled concerns on Wall Street that the sign is an unreliable store of wealth. However, this sentiment may change. Dallas Federal Reserve President Robert Kaplan said Friday that the sign appears to be, despite the volatility of bitcoin, as a value store. “The challenge [with] bitcoin is how widely it will be adopted – it’s clear at the moment that it’s a value store, “Kaplan said. It naturally moves a lot in value, so it can prevent it from spreading too far as a medium of exchange and wide acceptance. , but it can change and it will evolve. ‘
Further reading
Bitcoin Mining Hash rate drops as power outages set in China (Nasdaq)
Dogecoin Skyrockets to All-Time Highs Reaches $ 52.2 Billion Market Capitalization As Robinhood App Reports Interruption Issues Due to Heavy Trading in Cryptocurves (Forbes)