Chinese New Year has strong influence on cryptocurrency prices, with Bitcoin prices decreasing in the months leading up to the New Year
In Chinese New Year, cryptocurrency market making operations will have limited capacity. This leads to more volatile markets and less liquidity. Chinese New Year has a strong influence on the price of cryptocurrencies, with Bitcoin prices falling in the months leading up to the New Year.
For 4 consecutive years, the price of Bitcoin will always decrease in the weeks leading up to the Lunar New Year. This pattern has been called the “Chinese New Year Dump” by cryptocurrency traders. Market makers in China and other Asian countries will shut down in 3-5 days due to holidays. Although market creation can be automated by trading bots and algorithms, it still requires people to track daily activity to ensure that there are no problems.
One of the reasons for the drop in the price of Bitcoin is that people are cashing out for holidays. Due to the huge amount of cash needed, some people suspect that this tradition is responsible for increasing the Bitcoin Sell Orders before the Lunar New Year.
Since China is a huge contributor to Bitcoin mining, one can expect that cryptocurrency mining could be affected during the festival. This is because the mining does not require significant human strength to maintain and therefore, the mines will no longer function during the New Year.
The hash rate of bitcoin mining and mining difficulty has increased at the same time in 2020
On January 5, 2020, Bitcoin’s hash rate reached an all-time high of 117 exahash per second. Mining difficulties increased at the same time, setting an all-time high of 13.79 T on the second day of the new year.
Much of the increase in hash rates comes from China. F2Pool had a great week increasing their hash rate by about 1 exahash. Huobi and a few other groups also saw a strong increase in hash rates.
Some of these hash growths come from Bitmain’s operation, Antminer S17 +, a newly released, leading ASIC mining device. But this is the only new hardware that has hit the market in recent months. Therefore, the majority of additional hashing rates likely to come from the old models have become economically more feasible as the bitcoin price has been highly appreciated in the new year.
Mining companies turned off less efficient hardware to cut costs. But when bitcoin prices began to rise and these machines turned them black, the operators overturned them and the hash rate was returned.
As prices rise, Vera thinks a majority of miners will HODL more BTC because their profits increase, but there are still many Luxor miners who have converted directly to RMB / USD regardless of their amplitude.
But there’s a reason even more nuanced and more complex is still the increasing hash rate. According to Vera, large mining farms, especially in China, are providing hidden mining tanks (also called anonymous tanks) with operating materials.
As an operator of a North American mining group, Vera clearly hopes that North American miners will keep their hash rates at home. With escalating US and Iran tensions and the threat of long-term economic sanctions on the Iranian regime, this could create a legal limp for mining participants.
When Bitcoin and its mining sector enjoy greater legitimacy among institutional players, the prospect of US mining groups could become even more attractive if participants wanted to keep their profits from any fined money.
- The People’s Bank Of China (PBoC) Completed The “Top-Level” Design On Digital Yuan
- Money Laundering Report 2019: $11 Billion Out Of China Via Cryptocurrency