Ethereum plunged below $2000 today amidst a crackdown on Bitcoin mining in China.
Before hovering around $2000 in April, the world’s second-largest cryptocurrency by market capitalization fell momentarily below $2,000 twice—once in mid-April and again in mid-May—but each drop lasted just a few hours.
China’s Crypto Crackdown
The People’s Bank of China has ordered Chinese banks and payment institutions to cease offering a broad range of cryptocurrency services, including account opening, transactions, and settlements.
As part of the country’s broader crackdown on the sector, the Central Bank allegedly questioned five banks, including Alipay, and asked that they refrain from doing crypto-related activity.
The Agricultural Bank of China, the China Construction Bank, the Postal Savings Bank of China, and the Industrial Bank are among the other banks.
The statement by the Central Bank comes amid China’s broader attempts to clamp down on the cryptocurrency sector, particularly via the mining business.
Ethereum’s Place in the Cryptosphere
Ethereum, which was launched at the end of July 2015, popularized smart contracts, which are self-enforcing financial contracts that are performed on the blockchain.
Users may build apps on top of the Ethereum network, which was founded in 2013 by Vitalik Buterin and a group of other software engineers. Ether is the network’s native currency.
Because bitcoin and ether are both digital assets, they have a number of similarities. They do, however, have their differences.
Ethereum aspires to be the backbone of a decentralized internet that isn’t governed by any central authority, comparable to how bitcoin advocates view bitcoin as a gold-like store of value.
NFTs sprang from smart contracts: the one-of-a-kind coins, most of which are based on Ethereum, sparked a frenzy that propelled Ethereum above $4,100 this year.
Because each token is unique, non-fungible tokens are a popular method to market digital art. In March of this year, Beeple sold a collection of JPEGs as an NFT for $69 million.
Ethereum’s smart contracts have aided the creation of Decentralized Autonomous Organizations throughout this bull market.
DAOs enable an anonymous collection of individuals to manage themselves like actual companies using automated decision-making procedures and smart contracts.
Later this year, Ethereum 2.0 is anticipated to be released. The network will switch from the energy-intensive proof-of-work consensus method to a greener proof-of-stake model, which will result in cheaper fees, quicker transaction processing, and a 99 percent decrease in total energy consumption.
How do you feel about the fall in market cap for Ethereum?