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Willy Woo, an on-chain researcher, claims that a major power outage in China’s mining hub Xinjiang caused Bitcoin’s violent plunge to $50,000.
Woo reported that stories identifying the blackouts were released late last week, with the power outages taking place to enable safety checks in response to a recent flooding accident at a nearby coal mine, which saw 21 miners briefly stranded underground after power and communications went out.
Xinjiang accounts for almost one-quarter of the global hash rate, according to the Cambridge Bitcoin Energy Consumption Index, or BECI.
According to Ycharts, yesterday saw the highest daily decrease in overall Bitcoin network hash rate since November 2017, with hash rate dropping from 172 million terahashes per second, or TH/s, to less than 154 million TH/s.
Willy Woo, a popular cryptocurrency market analyst, blamed the April 18 cryptocurrency crash on a sudden decrease in hash rate caused by a power outage in the Chinese area of Xinjiang.
Woo points to a 9,000 BTC move to Binance on April 16, speculating that the funds were presumably sent by a “whale with closer knowledge of what is going on in China.”
Coupled with strong selling in the quarterly derivatives markets, the downward momentum resulted in $4.9 billion in Bitcoin liquidations and $4.4 billion in margin calls in the altcoin markets, with a reported 1 million accounts liquidated.
However, not everyone agrees with Woo’s analysis, with Cinneanhaim Ventures associate Adam Cochran calling the “idea that a power outage last night in a mining region in China caused the dop in $BTC” “utter nonsense.”
You might have seen charts around claiming that there is some sort of link between the mining hash-rate and Bitcoin’s price drop.
I’ve seen all sorts of words thrown around with this chart including ‘causations’ and ‘correlations’ by a lot of people who don’t math. pic.twitter.com/Gfog3Sk8Wo
— Adam Cochran (@adamscochran) April 18, 2021
Woo observed that long-term whales who seldom sell have been buying aggressively since the downturn, and that the lower $50,000 area is forming “the largest cluster of price discovery since BTC was below $10k.”
“Validation of BTC as a trillion dollar asset is immensely strong,” he said, adding that 13.5% of the entire BTC supply has been moved on-chain while Bitcoin’s capitalization has exceeded $1 trillion.