Markets

Here's Why Dogecoin Just Dropped

What happened

Dogecoin (CRYPTO: DOGE) is trading down about 15% at nearly $0.22 as of 10:30 a.m. EDT. With its price down close to $0.20, the cryptocurrency is a long way from the $1 level many believers were hoping for as the price skyrocketed over the first several months of 2021.

So what

There were two items of news on the cryptocurrency front this morning. The big news is the ongoing campaign China's government is waging against Bitcoin (CRYPTO: BTC). The People's Republic of China (PRC) has been cracking down on Bitcoin miners, driving Bitcoin's price to a level about 50% off its 2021 highs. And now China's PRC-controlled central bank has ordered Chinese banks and payment processors like Ant Group's Alipay to help throttle cryptocurrency trading, according to a report by The Wall Street Journal.

Shiba Inu dog with its eyes closed.

Image source: Getty Images.

Other news on the cryptocurrency front today was that MicroStrategy (NASDAQ: MSTR) continued piling more Bitcoin onto its balance sheet. But after adding almost $500 million of the digital currency to value its holdings to over $3 billion, the support isn't helping boost cryptocurrency prices. Bitcoin is also down more than 8% today to a two-week low.

Now what

China's crackdown on Bitcoin mining accelerated this weekend, with reports that many mines in the province of Sichuan were shut down. That means about 90% of the country's Bitcoin mining capacity is halted, according to CNBC.

Shuttering Bitcoin mining and an overall crackdown on cryptocurrency trading in China is having ripple effects on other digital currencies like Dogecoin. The campaign to eliminate a use case on cryptocurrencies is why Dogecoin's value is dropping today.

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Howard Smith has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Bitcoin. The Motley Fool recommends MicroStrategy. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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