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Bitcoin fell on Monday as investors’ desire for riskier assets waned and China’s cryptocurrency crackdown intensified. As of 7:40 a.m., the largest virtual currency had dropped as much as 9% to $32,605, and was trading just under $33,000. in the city of London Ether, the second-largest coin, fell as much as 11%.
The selloff coincided with a larger decline in assets such as equities and commodities in the aftermath of the Federal Reserve’s aggressive policy shift last week. Bitcoin was already under pressure over the weekend after it was reported that a Chinese city had launched a comprehensive crackdown on crypto mining businesses, the latest effort by regulators in the world’s second-largest economy to rein in the industry.
According to a source with knowledge of the issue, a government official in China’s Ya’an told at least one Bitcoin miner that the city has pledged to eradicate all Bitcoin and Ether mining operations within a year. Further, China’s hashrate – the computing power needed to mine currencies and execute blockchain transactions – is dwindling due to more governmental monitoring, which is causing investors to be concerned.
Moreover, The crypto community is also dealing with a drop in the value of tokens used in so-called decentralized-finance – or DeFi – apps. DeFi applications enable users to lend, borrow, trade, and purchase insurance directly from one another using blockchain technology, eliminating the need for intermediaries such as banks.