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Flood in China damages major cryptocurrency mining center

Summary:

  • A mining center in Sichuan province was damaged by a flood

  • Bitcoin (BITCOIN on xStation5) trades sluggishly in the vicinity of $6300 handle

  • EU report states that cryptocurrencies pose no threat to the sovereign currencies

Over the weekend we have seen a rise in the valuation of the most famous cryptocurrencies. The capitalization of the whole market managed to climb back above the $250 billion mark while the capitalization excluding Bitcoin sits just a notch below $150 billion. One of the reasons behind a surge in price could be a flood in China that damaged a major cryptocurrency mining centre. Apart from that we will mention interesting remarks from former US congressman as well as the latest EU Monetary Dialogue report.

Ron Paul, a former US congressman and a Distinguished Counselor to the Mises Institute, has made some interesting remarks on cryptocurrencies and economy in its latest article published on the Mises Institute website . He claimed that the US economy cannot be considered as a free market one as it is being steered by certain people within and outside the government and because of that it is set to crash. Moreover, Ron Paul said that the US government misrepresents growth or inflation data and this way artificially enhances trust in the greenback. He advices dropping the US dollar as an official currency and turning back to the precious metals or choosing to adopt cryptocurrencies as new official means of payment and a value storer. It is unlikely that we will see authorities even consider such shift in nearby future but we will certainly see a rising number of people supporting this view what may ultimately encourage officials to think about it.   

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Thanks to a significant price jump at the turn of Friday and Saturday BITCOIN is now trading above the descending price channel. The coin has been trading mixed in the vicinity of $6300 handle since. A break below the 33-period moving average on the H4 interval may encourage bears to enter the market. Source: xStation5

At the end of the previous week heavy rains pestered China causing floods in some provinces. One of the regions affected was Sichuan province where major cryptocurrency mining hub is located. Local media agencies reported that in turn “tens of thousands” of mining devices were damaged. The damage is said to be so severe that most of the machines seem to be impossible to repair. Let us recall that China holds the biggest share in the global cryptocurrency mining market being responsible for roughly 70% of the mining operations. In case no replacement for the damaged devices is found cryptocurrency supply may shrink what could be a positive impulse for the prices.

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ETHEREUM also experienced a significant rise in the valuation over the weekend. The coin is trading within the range of a resistance zone being limited from the upside by the 78.6% Fibo level of the last major upward impulse. A direction of the break from the zone may be decisive for the coin’s future price movements. Source: xStation5

European Parliament’s Committee on Economic and Monetary Affairs mentioned cryptocurrencies in its latest Monetary Dialogue report. The Committee stated that currently digital currencies do not pose a threat to central banks and sovereign currencies. As one of the reason behind such statement Committee names much smaller capitalization of the cryptocurrency market in comparison to the capitalization of fiat currencies. However, the Committee expressed belief that digital currencies may actual help smaller jurisdictions combat economic difficulties naming runaway inflation in Venezuela as an example. On top of that, the report advised financial regulators to treat cryptocurrencies as any other form of financial transactions or instruments.

 

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