Much of the more-than-two-month rally in Bitcoin’s price is linked to a drop in cryptocurrency sales by Chinese miners, according to analysts at QCP Capital.
This BTC move is becoming the trendiest (longest & most stable) rally in BTC’s history — 73 days and +73% now with only two 10% retracements along the way. Full market analysis here. https://t.co/xT8bhoc0tc
— QCP Capital (@QCPCapital) November 17, 2020
According to them, journalist Colin Wu corroborated the hunch, having previously reported serious problems among local industry players with paying electricity bills.
Following the start of China’s crackdown on fraud and money laundering in the crypto sector, major over-the-counter traders came under pressure. Analysts say the measures have tightened recently, followed by the arrest of representatives of centralized exchanges, such as Star Xu.
As a result, local miners lost access to traditional channels for obtaining legitimate yuan from selling Bitcoin, and their on-market supply of cryptocurrency has declined, according to QCP Capital analysts.
According to them, as early as September mining pools were selling large blocks of cryptocurrency, and Chinese Bitcoin miners account for 73% of the hashrate.
Colin Wu, whom QCP Capital cited, wrote that his report about problems paying electricity bills led to “two serious misunderstandings abroad”:
- Chinese miners are shutting down;
- they cannot sell Bitcoin, so the price rose.
A few days ago I wrote a report about Chinese miners being troubled by frozen cards and unable to pay electricity bills. There were two serious misunderstandings in overseas. First is that Chinese miners are shutting down, second is Chinese miners cannot sell BTC so price rised pic.twitter.com/Gd5nLSAQKI
— Wu Blockchain（Chinese Crypto Reporter） (@WuBlockchain) November 18, 2020
He clarified that difficulties accessing yuan did not seriously affect the industry, and Chinese miners continue to sell cryptocurrency. Wu believes the price rally is driven by growing demand from institutional investors, and relative to that miners’ supply is very small.
As Blockchain.com data show, on November 18 miner daily revenue reached a year-to-date high of $21.19 million.
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