Bitcoin reclaims $30K support but volatility means a further drop is still possible
Bitcoin has registered gains of ~2% over the last 24 hours, but monthly losses stand at -25%.
- The ongoing crypto bear market has wiped $1.9 trillion from the market.
- Bitcoin’s mining difficulty ratio, a potent indicator of the network’s overall security, is currently at an all-time high of 31.251 trillion.
- Bitcoin’s total market cap currently lies at $581 billion.
Bitcoin’s (BTC) value remains extremely volatile, staying range-bound between $32K and $27K over the past week. The asset is down 21% over the past 14 days and is presently trading at $30,441.
After soaring to an all-time-high valuation back in November 2021, the digital asset sector has lost $1.9 trillion of its worth. This number is higher than the wipeout recorded during 2007’s mortgage crisis, which saw $1.3 trillion lost from the market. The ongoing crypto volatility can potentially spill onto a number of traditional industries such as stocks, bonds and commodities.
Stablecoins or assets that have their values pegged to fiat currencies in a 1:1 ratio, such as TerraUSD (UST), Tether (USDT), have experienced a lot of bearish pressure. UST, which was the world’s third-largest stablecoin, recently lost its peg to the US dollar, falling to just $0.05 last week.
USDT dropped down to $0.95 on May 12, albeit briefly. Unlike the former, USDT forged a swift recovery thanks to its use of traditional reserves such as physical dollars and government bonds.
Financial Times analyst Robert Armstrong believes that the stablecoin market needs to be kept a close eye on, especially since its valuation has already exceeded $150 billion. He added: “If the pegs all break — and they could — there will be ripples well beyond crypto.”
Bitcoin’s network security at all-time high
On May 13, Bitcoin logged a new all-time high mining difficulty of 31.251 trillion, surpassing the 30-trillion mark for the first time. Mining difficulty refers to a mechanism that protects the ecosystem from network attacks, double-spending issues and others. It stops nefarious third-party actors from reversing confirmed transactions for their personal gains.
The asset’s current difficulty ratio implies that it is almost impossible for any hacker to take over more than 50% of its hash rate, a measure of the system’s total computational power required for mining purposes. As per data on blockchain.com, the BTC network currently demands 220.436 million terahashes per second (TH/s). Despite the ongoing financial turbulence and targeted attacks, BTC remains one of the most secure blockchains in the market today.
Interested in cryptocurrency? Learn more about the basics with our beginner’s guide to Bitcoin, dive deeper by learning about Ethereum and see what blockchain can do with our simple guide to DeFi.
Disclosure: The author owns a range of cryptocurrencies at the time of writing.