Bitcoin trading volume and exchange fees dive amid Beijing’s ongoing crackdown in the name of financial stability
- Transaction fees fell by 93 per cent and trading volumes by nearly half since all-time highs in April and May, respectively
- An ongoing cryptocurrency crackdown in China has pushed down bitcoin prices by more than 40 per cent, and there are no signs Beijing will let up soon
Daily trading averages fell to US$34.8 billion in the first eight days of June, a sharp decline from the record US$67 billion last month and the lowest for any month since last December according to CoinDesk Research.
The average bitcoin transaction fee – the amount paid to miners who process transactions – also fell to US$4.38 over the weekend, a 93 per cent decline from its peak of US$62.77 in April, according to Cointelegraph.
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Bitcoin “mines” are large computer server arrays used for verifying transactions on the bitcoin blockchain, which is achieved by completing complex calculations. To incentivise miners to contribute to decentralised network, they are rewarded with bitcoins for verifying transactions and can charge a transaction fee. The fee is usually affected by supply and demand, along with the size of the transaction and the number of transactions a coin has already gone through.
With the crackdown in China showing no signs of easing up soon, bitcoin prices have plunged by more than 40 per cent from their all-time high of more than US$62,000 in April.
The latest crackdown kicked off in May, when the financial body of the State Council, China’s cabinet, issued an alert on the matter, citing financial risks. Liu He, the top economic adviser to Chinese President Xi Jinping, said that the government will “crack down on bitcoin mining and trading behaviour, and resolutely prevent the transfer of individual risks to society”.
Chen said that the signal from the meeting “has scared away some traders”.