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Crypto recovery stalls as miners eye exits

Berita 24 English -  Cryptocurrencies struggled to regain their footing on Monday, as even Elon Musk's weekend cheerleading appeared una...

Berita 24 English - 
Cryptocurrencies struggled to regain their footing on Monday, as even Elon Musk's weekend cheerleading appeared unable to offset selling pressure from fearful investors or nerves about a looming crackdown on the asset class in China.

Musk lent support to crypto on Saturday, tweeting his support for it in "the true battle" against fiat currencies.

However, prices fell on Sunday as "miners," who generate cryptocurrency by verifying transactions, ceased operations in China to increase government scrutiny.

Bitcoin climbed as high as $35,970 from Sunday's trough of $31,107, but the growing sense of a shakeout in the frothy market made further gains difficult, and it remains nearly 45 per cent below last month's record high of $64.895.

The collapse returns the world's largest cryptocurrency to its February levels before Tesla announced a $1.5 billion bitcoin purchase and later reversed its decision to accept bitcoin as payment for cars.

Ether, a rival cryptocurrency, fell to a nearly two-month low of around $1,730 on Sunday and then surged to a high of $2,101 on Monday before losing steam. Dogecoin, which began as a parody before gaining more than a hundredfold in value this year due to Musk's backing, last traded at $0.30.

"After a brief rebound from last week's multi-month lows, some of the paper-handed types appear to have sold-out," IG Markets analyst Kyle Rodda said, referring to short-term investors who sell at the first sign of trouble.

"Or (they) decided to sell and take a loss," he explained, "as Bitcoin's momentum and the speculative mania that drove it fade almost completely."

The initial crypto selloff appeared to be precipitated by Chinese regulators' toughening language last week, which was ratcheted up further on Friday when a State Council committee vowed to crack down on miners in particular.

Gravity also played a role following months of gains, and the focus on Chinese miners - who account for roughly 70% of supply - has dampened sentiment further.

"Many miners retain a significant portion of the bitcoin/ETH/etc. They mine and do not immediately hedge it into fiat," said James Quinn, managing partner of Q9 Capital, a Hong Kong-based cryptocurrency private wealth manager.

"If they are relocating or ceasing operations, they may need to reduce their balance sheets temporarily.

Huobi Mall, a subsidiary of cryptocurrency exchange Huobi, announced late Sunday that it had suspended crypto mining for mainland Chinese clients. BTC.TOP, a cryptocurrency mining pool, has suspended operations in China, citing regulatory concerns, while crypto miner HashCow has announced a halt to new bitcoin rig purchases.

Crypto miners verify transactions using increasingly powerful, custom-built computer equipment or rigs in a process that generates new cryptocurrencies.

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