The Bitcoin (BTC/USD) and cryptocurrency market has been affected as a result of China’s recent crackdown on Bitcoin miners in the country. Bitcoin’s price and other cryptocurrency prices have fallen by a large percentage for the past few weeks. Although the market has started correctly slightly, it is still very volatile to predict any stability at the moment.
However, some market experts believe the price of Bitcoin and other cryptocurrencies will soon pick up once many Bitcoin miners have reestablished themselves in other regions.
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Ulrik Lykke, executive director of crypto hedge fund ARK36, is someone who thinks the present crackdown can help Bitcoin in the long run.
While speaking during a CBNC interview, he thinks the situation in China could contribute greatly to more decentralization of Bitcoin.
According to him, although the hash rate has dropped significantly, it will increase when miners start moving and establishing elsewhere. The crackdown will disperse miners as many of them will establish in different locations.
While China has accommodated the large majority of Bitcoin miners, there may not be a particular location with such dominance of miners in the future, Lykke added.
Bitcoin and CBDCs can coexist
Lykke also spoke about the implementation of a central bank digital currency (CBDC) by the Chinese government and the impact it will have on Bitcoin. Many observers believe that part of the reason for the Chinese regulatory crackdown on Bitcoin was to pave way for the launch and acceptance of its CBDC.
Lykke says there’s no definite date for the launch and it’s not certain whether it will ever be launched. However, he noted that Bitcoin and CBDCs can coexist and there is no reason why “one should out-rule the other.”
The use of blockchain technology used to develop both Bitcoin and the CBDC can create an avenue for more interest in Bitcoin.
Bitcoin’s volatility is temporary
Lykke was asked how the Bitcoin and crypto market will change structurally due to the Chinese crackdown on miners. He stated that the Bitcoin market will be volatile in the short to medium term. However, the market will come back bustling in the long term.
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