Crypto recovery stalls as miners eye exits
SINGAPORE (Reuters) - The cryptocurrency struggled to gain a foothold on Monday, even after weekend cheerleading from Tesla boss Elon Musk, which appears to have stemmed sales pressure from investors or nerves stemming from a gathering action on the asset class in China. Is unable to offset.
Musk made the bid on Saturday by tweeting support for crypto in a "true battle" with fiat currencies.
But on Sunday, prices fell as "miners", who mined crypto by confirming transactions, halted Chinese operations due to increased scrutiny by authorities.
Bitcoin climbed to $ 35,970 from Sunday's trough at $ 31,107, but the growing sentiment of a shock flowing through the frothy market left it struggling to make further profit and it almost fell from the previous month's record peak of $ 64.895 Down 45%.
The collapse leaves the world's largest cryptocurrency back to where it traded in February, before Tesla announced a $ 1.5 billion bitcoin purchase and took the reversal decision since accepting it as payment for cars.
Rival crypto currency Ether hit a nearly two-month low around $ 1,730 on Sunday and hit a high of $ 2,101 on Monday before losing some steam. Dogcoin, launched as a parody before Musk's endorsement, increased it more than a hundred times this year, last trading at $ 0.30.
IG Markets analyst Kyle Rodda said, "After a brief surge at last week's multi-month low, some paper-handed types have sold out," using the term market for short-term holders selling at first signs Of trouble.
"Or (they) decided to pack it up and cut their losses," he said, "as the pace of bitcoin and the speculative frenzy driving it, almost completely vanishes."
The trigger for the initial crypto sale came from the strict language of Chinese regulators last week, which was further heightened on Friday when a State Council committee vowed to tighten the knuckles exclusively on miners.
Gravity has also played a role after months of gains and attention to Chinese miners - which account for about 70% of the supply - has further dampened sentiment.
"Many miners keep a lot of bitcoin / ETH etc. that they mine and don't immediately hedge it in fiat," said James Quinn, managing partner of Q9 Capital, a Hong Kong-based cryptocurrency private wealth manager.
"If they are increasing or closing stakes, they may need to reduce their balance sheet in the short term."
Late Sunday, Huobi Mall, part of the cryptocurrency exchange Huobi, said on Monday that it had suspended crypto mining that serves mainland Chinese customers. BTC.TOP, a crypto mining pool, has suspended its China business citing regulatory risks, while crypto minor Hashco said it would stop buying new bitcoin rigs.
Crypto miners increasingly use powerful, specially designed computer equipment, or rigs, to verify transactions in a process that produces newly minted crypto currencies.