A Coal Mine Explosion in Xinjiang and its Impact on Bitcoin

The cryptocurrency market suffered huge losses on early Sunday after blackouts in China led to massive declines in bitcoin’s mining rates, tanking prices as well as spurring billions of dollars in liquidations. Bitcoin declined to about $54,750 on Sunday. However, the price of the world’s largest cryptocurrency rebounded on Monday. At the moment, the price of this cryptocurrency is more than $56,000.

An overnight crash that started on Saturday, tanked the total market capitalization of cryptocurrencies around the world by about $310 billion in less than 24 hours. The cryptocurrency market declined from more than $2.2 trillion to less than $1.9 trillion at around 8 a.m. Eastern. Nevertheless, in a short period of time, the market climbed back to roughly $1.5 billion. However, the price of bitcoin was still down about 10.5% over the past 24 hours.

Cryptocurrency liquidations during the latest crash totaled more than $10 billion, reaching their highest points in 2021. According to analysts, the cryptocurrency market suffered losses due to a stark nearly 50% decline in bitcoin’s hash rate. It measures the total processing power being used to mine the cryptocurrency and process its transactions.

A coal mine explosion in China’s Xinjiang region had a huge impact on the cryptocurrency market. This region is home to one of the biggest bitcoin mining networks in the world. The blackouts took days to affect bitcoin’s hash rate, which declined from an all-time high above 215 exahash per second. The hash rate fell from 215 on Wednesday to about 125 exahash per second on early Sunday.

Bitcoin and important details

Price, as well as the hash rate, have always been correlated and people should be aware of this fact. Several years ago, after a flash crash, once the hash rate started to normalize in both instances, the price of bitcoin also started to recover.

A heightened institutional adoption and inflationary concerns helped the cryptocurrency market. Nonetheless, bitcoin’s unyielding volatility spurred concerns on Wall Street that the token is an unreliable source of wealth.

Hopefully, that sentiment might be changing. Despite a tumultuous weekend, Bitcoin’s market capitalization is more than $1 trillion. This fact once more highlights the strength of this cryptocurrency. Dallas Federal Reserve President Robert Kaplan made a comment about bitcoin on Friday. He stated that despite bitcoin’s volatility, it proved itself as a store of value.