Bitcoin fights back following brutal selloff

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Cryptocurrencies fought back on Monday, clawing back ground after a bout of weekend selling fuelled by further signs of a gathering Chinese crackdown on the emerging sector.

Bitcoin climbed as high as $37,391 after falling some 7.5% a day earlier, and was last up 5%.

Second-largest cryptocurrency ether jumped more than 10% to as high as $2,321, erasing losses of 8.6% on Sunday that pushed it to near a two-month low around $1,730.

The catalyst for the slump was cryptocurrency “miners”, who mint cryptocurrencies by using powerful computers to solve complex maths puzzles, halting Chinese operations in the face of increasing scrutiny from authorities.

The attention on Chinese miners – who account for some 70% of supply – is the latest front in a wider push by Beijing against the cryptocurrency sector.

Major cryptocurrency exchange Huobi on Monday suspended both crypto-mining and some trading services to new clients from mainland China, adding it would instead focus on overseas businesses. Others also suspended business in China.

In the short-term, market players said, that is likely to lead to pressure on prices as miners sell bitcoin held on their balance sheets.

“If they are pulling up stakes or shutting down, they may need to reduce their balance sheets in the short term,” said James Quinn, managing partner at Q9 Capital, a Hong Kong-based cryptocurrency private wealth manager.

DAILY NATION