Simply Bitcoin: Bitcoin’s Incentives Destroy China’s Mining Ban
Cryptocurrencies are down over 50 percent from their peak just a few months ago. While that’s somewhat typical for the volatile asset class, other trends point towards the space continuing to attract capital and investor interest.
For instance, it’s been nearly one year since China banned cryptocurrency mining. They were the largest source of crypto mining, thanks to cheap and abundant electricity costs.
However, one year later, and data out of China shows that the ban has been somewhat ignored. More importantly, the global hash rate for the Bitcoin network shows that the cryptocurrency is stronger than ever, with more miners and nodes running.
That’s a strong sign that individuals continue to invest in the cryptocurrency space. And many corporations and even countries continue to onboard into Bitcoin. Overall, it’s clear that even with the price down, the network continues to grow.
As crypto networks grow, the more value and capital they tend to attract. So in time, this recent selloff in the crypto space may simply be clearing the deck for the next big move higher.
To get such a move higher, a few things need to happen. First, sentiment needs to shift away from being so negative right now. And we’ll likely need to see more monetary easing, or at least a decrease from the current tightening policy. Such a trend may start to play out in the next few months.