Bitcoin reclaims AUD$43.5k support but volatility means a further drop 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 seen AUD$2.7 trillion (US$1.9 trillion) being wiped out 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.
- BTC's total market cap currently lies at just under AUD$840 billion.
Bitcoin's value continues to remain extremely volatile, staying range bound between AUD$39k and $49k over the past week. The asset is down 21% over the past 14 days and is presently trading at AUD$43,891.
After soaring to an all-time-high valuation back in November 2021, the digital asset sector has lost AUD$2.7 trillion (US$1.9 trillion) of its worth. This number is higher than the wipeout recorded during 2007's mortgage crisis, which saw AUD$1.89 trillion (US$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 been on the receiving end of 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 US$0.05 last week.
USDT dropped down to US$0.95 on 12 May, albeit briefly. Unlike the former, USDT was able to forge 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 US$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 13 May, 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). In spite of the ongoing financial turbulence and targeted attacks, BTC remains one of the most secure blockchains in the market today.
Disclosure: The author owns a range of cryptocurrencies at the time of writing.