Bitcoin, ether, dogecoin prices continue to fall. Here’s why

Bitcoin fell to a two-week low amid an intensifying cryptocurrency crackdown in China. The drop comes amid a growing crackdown on cryptocurrencies in China, where authorities in the southwest province of Sichuan on Friday ordered bitcoin mining projects to close.

Bitcoin tumbled almost 10% on Monday while while other digital coins like Ether dropped as much as 12% in the last 24 hours, falling below $2,000 for the first time in almost a month. Dogecoin also declined 12% to trade around $0.22.

The world’s biggest cryptocurrency by market capitalization has lost over 20% in the last six days alone and is down by half from its April peak of almost $65,000. However, it has still gained over 10% this year.

China has ordered payment platform Alipay and domestic banks to not to provide services linked to trading of virtual currencies. The institutions were also ordered to cut off payment channels for crypto exchanges and over-the-counter platforms, the People’s Bank of China said in a statement.

Separately, a Chinese city with abundant hydropower has stepped up action to rein in mining. A Ya’an government official told at least one Bitcoin miner that the city has promised to root out all Bitcoin and Ether mining operations with a year, sources told Bloomberg. Some commentators, as reported by Bloomberg, have said China’s hashrate — the computational power used to mine coins and process blockchain transactions — is waning amid harsher regulatory oversight.

Data on mining is scarce. Yet production of bitcoin in China accounted last year for about 65% of global production, according to data from the University of Cambridge, with Sichuan its second-biggest producer. Companies that mine bitcoin – an energy-intensive process – typically hold large inventories of the cryptocurrency, with any moves to sell large amounts depressing prices.

The crypto faithful are also grappling with a tumble in tokens used in so-called decentralized-finance — or DeFi — applications. DeFi apps let people lend, borrow, trade and take out insurance directly from each other using blockchain technology, without use of intermediaries such as banks.

For instance, the DeFi Titanium token went from being valued at around $60 to $0 — a rare occurrence even for famously volatile crypto markets. Famed mogul Mark Cuban had invested, telling Bloomberg News earlier that though it represented a small percentage of his crypto portfolio, the wipe-out “was enough that I wasn’t happy about it.”

(With inputs from agencies)

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