FX.co ★ Chinese miners back on track and Bitcoin still trading low

While bitcoin investors are experiencing serious stress and the world's first cryptocurrency is preparing for another fall and hitting the yearly lows, bitcoin miners in China are not giving up - even despite the official ban from Chinese officials. Notably, China used to be the world's largest crypto-mining hub a couple of years ago, accounting for 65% to 75% of the network's hash rate. However, in July 2021, China's share of bitcoin mining fell to zero thanks to the authorities, who began to pursue policies against the entire industry.

The reason for this is quite obvious. The consensus mechanism, known as Proof-of-Work, consumes a lot of energy as much as entire countries like Sweden and Norway. The Chinese authorities have criticized miners for causing problems in the country's energy system. When the world's second-largest economy faced months of power shortages that led to numerous blackouts, the authorities decided to ban mining and then went so far as to block cryptocurrencies altogether.

All of this forced miners to flee the country, moving their bitcoin mining operations to other countries, including Russia, the United States, and Kazakhstan. However, some sources say, several underground mining operations have sprung up in China that are mining bitcoin to circumvent Beijing's ban.

A new study by the Cambridge Centre for Alternative Finance shows that bitcoin mining activity in China has recovered quickly. By September 2021, China already accounted for just over 22% of the entire mining market. This means that China is once again the world's leading bitcoin mining player, second only to the United States.

However, the methodology of the study is controversial. It relies on the aggregate geolocation of huge mining pools, which pool computing resources for more efficient mining. This will help determine where activity is concentrated in different countries. According to the research, this approach has a number of inaccuracies, as miners can use these metrics to deliberately obfuscate using a virtual private network. This allows them to hide their actual location. Virtual private networks allow users to route their traffic through a server in another country, making them handy tools for people in countries like China, where global Internet use is highly restricted.

As for the technical picture of bitcoin, after the biggest sell-off, which was triggered by the collapse of the UST stablecoin and Terra blockchain, the price stabilized slightly. However, it is very early to say that buyers are actively returning to the market. On the opposite, profit-taking and speculative traders have helped support the price, but the larger players continue to wait and see. To develop the initiative on the part of bulls, it is necessary to be active near $31,000. Before that, it is necessary to try to return above $29,400. Only fixing above these two levels may take the asset back to $32,650, allowing investors to calm down a bit. A breakthrough of $29,400 and weak activity of buyers is likely to push BTC back to the low of $27,600, and there will be no time to go back to $25,700, which will make the market reverse again and cause panic among many investors.

As for the technical picture of Ethereum

The focus has already shifted to $1,980 resistance, which until recently was a strong support level. Only the increase from this level may lead to a jump back to $2,150. It will be possible to speak about building an uptrend only after the asset pierces $2,150, which will quickly bring ETH back to $2,295, and then to $2,430, which will be a serious problem for traders. Only fixing above this level will allow building an uptrend with the prospect of hitting new highs near $2,630 and $2,760. In the case of a return of pressure on ETH, it would be possible to buy the asset near the next support at $1,840. A breakthrough of this level will be a reason to go to the yearly low of $1,690, where large players will be active again.