Bitcoin fell as much as 14 per cent today, shedding most of the volatile cryptocurrency’s gains over the last year.
The digital asset has surged so far this year as it begins to gain mainstream acceptance as an investment and as a form of payment.
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But it dropped as much as 15 per cent to $51,541 today as a recent sell-off gathered pace.
The cryptocurrency recovered some losses and after 5pm it was trading at $55,832. However, this is still more than $10,000 below the record highs it hit on Wednesday.
Rival currency Ether, which is linked to the ethereum blockchain network, dropped 10 per cent.
A blackout in China’s Xinjiang region, which reportedly powers a lot of Bitcoin mining, was blamed for the sellout by crypto website Coinmarketcap.
Some analysts pointed to a sharp drop in the so-called hash rate due to the outage.
The hash rate refers to the volatility index that measures the processing capacity of the entire Bitcoin network and determines the power required by miners to produce new Bitcoins.
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Luke Sully, chief executive of digital asset treasury specialist Ledgermatic, told Reuters that people “may have sold on the news of the power outage in China and not the impact it actually had on the network”.
“The power outage does expose a fundamental weakness; that although the Bitcoin network is decentralised the mining of it is not.”