BTC price fell 16%, leaving it at a level not seen since December 2020. This marks the complete reversal of all the monumental gains earned during the 2021 bull-run.
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Yesterday was a dark day for crypto — one of historic proportions. BTC price fell 16%, leaving it at a level not seen since December 2020. This marks the complete reversal of all the monumental gains earned during the 2021 bull-run. Yesterday's capitulation was sparked by Friday's higher-than-expected inflation figures — 8.6% CPI in the US, a new 40-year high — and accelerated by a handful of high profile cracks appearing among crypto companies. The most high profile of these being digital asset exchange Binance pausing withdrawals for some customers, while other exchanges announced job losses. Risky assets are suffering across the board, the Nasdaq-100 down 4.6% for its biggest single-day loss since March 2020, but crypto assets are taking the brunt of damage as investors continue flocking to safer shores. The short-term outlook is reasonably bleak. Investors have been surprised by how easily inflation has eluded the Fed thus far, and market turmoil reflects concerns over the lengths to which it might have to go to reign prices back in. There will be no recovery in crypto until inflation is under control.
Looking ahead, however, there are reasons to be optimistic about recovery. Bitcoin's gains in 2020 and 2021 were enabled by significant behind-the-scenes operations and compliance work at the institutions whose capital funded these gains. They charted a course for growth in territory that was previously uncharted — a course meaning that, when sentiment does recover, capital has an easy route back in. It's just a waiting game.
Network hashrate is, for now, roughly flat week-on-week at 217 EH/s — though there will be a growing proportion of the network for whom profitability is being tested. Difficulty was adjusted up last week to 30.3T — still below May's 31.5 all-time high — and is set for its next adjustment in about a week's time. Hash price has fallen below $0.10 for the first time since 2020. For now, hashrate seems to be stable — block times over the 24 hours before writing were averaging a faster-than-expected 9.2 minutes — though this may begin to tail off if profitability remains subdued for any prolonged period of time.