Bitcoin Price Hit $18,000: China is a reason?
Cryptocurrency exchanges in China are again undergoing high pressure from the authorities. A trading company from Singapore QCP Capital reported that Chinese miners have liquidity troubles and are prevented by the government from selling their digital assets. This odds in demand and supply has led the Bitcoin price to move to $18,000.
Bitcoin`s Supply and Demand Economy
The supply and demand structure is a fundament of the latest Bitcoin rally. When the demand is highly rising and the supply is wearing out the BTC price is significantly going up.
According to QCP Capital, the Bitcoin price today highly depends on the lack of supply. However there is a lot of buzz around the inflation hedge and macro factors, the company believes there is a different reason for such rapid growth:
“The lack of supply has fed extremely well to the trendiness of this rally, without any of the large sell-downs typical of miner activity in the past,” says QCP Capital.
Miners work daily and get payments in local currencies. That means they are constant sellers and thus, they have a regular influence on the Bitcoin price.
Nowadays the Chinese Bitcoin miners have control over the 70% of mining power (hash rate). But due to the Chinese government’s crackdown, the bank accounts of miners are frozen. It is not possible for them to sell their Bitcoins for cash. This scarcity of supply is causing Bitcoin to reach its ATH level pretty soon.
74% of Bitcoin Miners Face Issues
The Chinese crypto reporter Wu Blockchain noted that around 74% of Bitcoin miners have liquidity issues since June 2020 when the Chinese government has started the crackdown. Since that time the situation is only getting worse.
"As the Chinese government is cracking down on the exchange of crypto and legal currency, Chinese miners are facing a major problem in paying electricity bills. 74% of the miners surveyed told Wu that the payment of electricity bills has been greatly affected." tweeted the reporter.
QCP Capital said in the report that in September the Bitcoin price fell down from $12,000 to $10,000 and the correction was caused by miners selling BTC. But later in October the crypto exchange OKEx suspended operations due to the crackdown. QCP Capital said:
“Mining pools were selling large chunks of Bitcoin in early September through exchanges, but this was hastily halted as their last remaining fiat off-ramp avenues were impacted with the arrest of large exchange heads like Star Xu and other [over-the-counter] brokers”.
At the moment of writing the article, Bitcoin is trading at $18,037 with a market capitalization of $330 billion.