It sounds too salacious to be true, but a weed ban may have caused bitcoin to drop below $100K. The new restriction was quietly inserted into Wednesday’s landmark funding bill that was widely celebrated for finally ending the longest government shutdown in U.S. history. But as the government reopens, the hemp industry might just go up in smoke, thanks to a sneaky provision in the bill, that could shutter a $28 billion sector, putting some 300,000 jobs at risk.

(A loophole in the 2018 Farm Bill gave rise to a retail hemp industry that sells products with enough THC content to induce a high / Image from cabq.gov)

“The government is open, but a hemp industry shutdown has just begun,” said Kentucky Senator Rand Paul. “In true Washington swamp fashion, this hemp ban is not being debated on its own. Once again, Congress created a crisis, then conveniently used the crisis to jam through new laws without debate.”

Read more: Bitcoin Stumbles as US Government Shutdown Looms

The controversy goes back to 2018, when Paul’s senior colleague Senator Mitch McConnell, also representing Kentucky, championed the 2018 Farm Bill. The legislation greenlighted the use of hemp for industrial purposes. But a loophole that measured hemp concentration by weight instead of quantity spawned a thriving retail industry that sold “hemp” products with enough Tetrahydrocannabinol (THC) to induce a high. Hemp and marijuana are both products of the cannabis plant and both contain THC, but marijuana contains a higher concentration of the active ingredient, typically 0.3% THC or more.

“Unfortunately, companies have exploited a loophole in the 2018 legislation by taking legal amounts of THC from hemp and turning it into intoxicating substances”, McConnell argued on Tuesday. “My efforts to close the loophole and stop this from happening are included in this appropriations package.”

(U.S. Senator Mitch McConnell inserted language into Wednesday’s funding bill that effectively wipes out the entire $28B retail hemp industry which employs more than 300,000 Americans)

Other catalysts have weighed on bitcoin’s price for the past few weeks, notably the alleged AI bubble, interest rate uncertainty, and even the government shutdown itself. But Thursday’s precipitous drop, may indeed have been triggered by fears of the economic fallout that may ensue if 300,000 jobs are lost and an entire industry is wiped out, all with the stroke of a pen.

“This bill contains language that has been airdropped in that will destroy hemp farming in Kentucky and across the United States,” Paul said. “This is the most thoughtless, ignorant proposal to an industry that I’ve seen in a long, long time.”

Bitcoin was priced at $98,655.49 at the time of writing, down 2.63% since Wednesday and also lower by 2.87% for the week, according to Coinmarketcap. The cryptocurrency has been trading between $98,205.58 and $104,005.49 over the past 24 hours.

( Bitcoin price / Trading View)

Daily trading volume jumped 45.41% to $92.65 billion as a sell-off broke out, pushing market capitalization below the $ 2 trillion threshold to $1.96 trillion. But the digital asset still outperformed lesser coins and increased its dominance by 0.39% to 60.15%.

( Bitcoin dominance / Trading View)

Total value of open bitcoin futures contracts was mostly flat, inching up 0.36% to $66.27 billion over 24 hours, according to Coinglass. But liquidations soared to a total of $235.80 million, and as expected, long investors took the biggest hit, losing $200.47 million in liquidated margin. Short sellers’ losses were largely unchanged from yesterday’s numbers, totaling $35.34 million for the day.

• Why did bitcoin fall below $100K?
  The drop was partly linked to a surprise hemp ban tucked into the new U.S. funding bill.
• What does the new ban do?
  It closes a loophole in the 2018 Farm Bill that allowed hemp products with intoxicating levels of THC to be sold legally.
• How big is the potential economic impact?
  The ban could threaten a $28 billion industry and 300,000 U.S. jobs, sparking broader market fears.
• What are other factors weighing on bitcoin?
  Persistent worries about an AI bubble and rate uncertainty continue to pressure prices.

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