A storm on the ocean of cryptocurrencies [Saxo Bank Comment]

The cryptocurrency market is experiencing a widespread sell-off after China has further tightened its approach to these values, while mining activity has hit its lowest level in a year. In contrast, France, Portugal and Israel are making advances in digital asset technology.

About the author

Anders Nysteen - joined Saxo Bank in 2016 to the department Quantitative Strategiesand its main goal is to develop mathematical trading strategies and asset allocation models. Anders holds a degree in physics and nanotechnology from the Technical University of Denmark and a PhD in quantum photonics.

Difficult week

It has been a difficult week for the crypto market: at the time of writing this article, bitcoin has only just managed to gain a bit after dropping below $ 29 - its price is now 000% lower than it was a week ago - while last week's ethereum went down by 28%. The move away from investment products in the form of digital assets has resulted the longest series of dips from February 2018. The decline began as China further tightened its stance on the stock, and the Chinese central bank appealed to some major banks and payment organizations for stricter treatment of cryptocurrency trading.

The decline in mining activities affects the sale of graphics cards

Wskaźnik hash rate (computing power of the network) Bitcoin it has reached the lowest level since last year; a similar trend was recorded by other cryptocurrencies using an energy-intensive protocol proof-of-work for transaction validation. According to recent reports, mining of cryptocurrencies in the Chinese province of Sichuan was recently suspended after a series of bans on mining cryptocurrencies in other regions, which is likely to affect hash rate. Some miners are looking for new locations to do business: A Chinese bitcoin mining company has already delivered the first batch of hardware for Kazakhstan. 

Demand for graphics cards appears to have declined; according to South China Morning Post, after the bans were introduced, the prices of graphics cards on e-commerce platforms fell by as much as two thirds. On the other hand, Australian local hardware sites They report that GPU inventories are starting to return to pre-pandemic levels with prices going down 5-10%.

Still split views on governments' adoption of digital assets

The Portuguese central bank for the first time since the new law on cryptocurrency trading platforms entered into force earlier this year granted permission to operate two companies offering "Virtual Assets Services". In turn, the French central bank - Banque de France - successfully ended Pilot Project concerning the currency of the central bank for trading in securities. In contrast, the Israeli central bank has already conducted a pilot test of its own cryptocurrency - digital shackle. On the other hand, the Russian central bank holds up tough stance on cryptocurrency trading due to the fact that "Losses can be huge".