• Friday, September 29, 2023
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Bitcoin bears persist despite Bitfarms’ listing, Microstrategy’s new coins


The price of bitcoin is staying down unrelenting irrespective of potential pump moves by Microstrategy which acquired approximately 13,005 additional bitcoins for about $489 million in cash at an average price of $37,617 per bitcoin on Monday.

Microstrategy’s new coins mean as of June 21, 2021, the company now holds an aggregate of approximately 105,085 bitcoins, which were acquired at an aggregate purchase price of approximately $2.741 billion and an average purchase price of approximately $26,080 per bitcoin inclusive of fees and expenses. MacroStrategy LLC, a subsidiary of MicroStrategy, holds approximately 92,079 of the bitcoins

Canadian bitcoin miner, Bitfarms (BITF), also added a positive spin to the market by listing on the Nasdaq exchange on Monday after receiving approval last month. Bitfarms is the second cryptocurrency business to be listed on Nasdaq. Coinbase made history in April when it went public by direct listing on Nasdaq.

However, unlike in April when the news of Coinbase listing partly drove up the price of Bitcoin, the bulls stayed away from Bitfarms’ big day. Bitfarms, which powers about 1 percent of the bitcoin network with about 99 percent hydroelectricity, is the first crypto mining company to go public.

Thanks to the Chinese government favouring a crackdown on the crypto market, the price of bitcoin on Monday traded at $31,760 for the first time since June 8, data from Coin Metrics show. The price was last trading at $32,672 on Coinmarketcap Index.

“Microstrategy bought (13,000) bitcoin and the price is still in the gutter. Fear is leading the market right now and no amount of good news can snap investors out of it,” tweeted Lark Davis, a crypto investor.

Bitfarms’ share price dropped 8.6 percent driven by broader crypto market losses. On Monday the share price opened at $4.04 and quickly rose to $4.11 before dropping to $3.90 on the same day.

The decline is mostly coming from China which has cracked down on crypto mining leading to the exodus of many mining companies. In May 2021, China’s cabinet known as the State Council said there was no going back on restricting mining and trading of cryptocurrencies as part of a campaign to control fiscal risks.

Unfortunately for Bitfarms, its big announcement fell on the same day the Peoples Bank of China said it had ordered some banks and payment firms like China Construction Bank and Alipay to tighten the noose around the neck on cryptocurrency trading.

The Chinese government has been pushing to ban bitcoin since 2014. Monday’s directive on financial services providers represents one of the most frontal steps in the campaign to limit the impact of cryptocurrencies on China’s economy.

Miners in Sichuan, a southwestern city in China, were forced to close shop on Sunday following a directive by the government to halt mining activities. A Chinese media report estimates that over 90 percent of China’s bitcoin mining capacity has shut down since the directive.

China represents about 75 percent of bitcoin mining globally but the Chinese authorities are averse to seeing bitcoins in popularity as a medium of exchange. The country would rather project its digital Yuan as dominant than bitcoin.

The digital Yuan, however, bears little similarities with bitcoin beyond both being digital-based currencies. Whereas bitcoin is largely in line with the idea of a private currency that circumvents the exclusive right of the state to issue money, China’s digital currency attempts to do the opposite. It is a state-backed digital currency that would enable consumers to access digital legal tender straight from their bank.

China also plans to deploy the digital Yuan for international transactions, thereby positioning it as a prime competition for the US dollar.