While much of the headlines are dominated by the price of Bitcoin (BTC) and constant debates over whether we’re in a bull or bear market, the Bitcoin network carries on undeterred, mining a new block every 10 minutes. Read five fascinating facts about the OG crypto here.
If all this price noise makes you nervous, listen to the advice of the top industry analysts, “if in doubt, zoom out.” Looking at the bigger picture, the Bitcoin network grows despite the price volatility, accruing new users every day. And that’s just one surprising fact about Bitcoin.
Despite tumbling prices, the Bitcoin hash rate continues to hit all-time highs in 2022, on Jan 2, and again on Jan 15, when it registered 183 exahashes per second. Hash rate refers to miners’ amount of computing power to verify transactions and mine new Bitcoins. The higher the hash rate, the more computational power being spent by miners, and the stronger the Bitcoin network. This is important as a secure network mitigates threats like 51% attacks by making them harder to achieve.
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As Bitcoin developer and Casa wallet founder Jameson Lopp pointed out, an all-time high hash rate is not only significant because the network is stronger. The metric perfectly showcases Bitcoin’s resilience after China’s blanket ban on cryptocurrency mining in June 2021, which caused a decline in the hash rate to as low as 61 exahashes per second. Lopp called this “a major milestone for network resilience.”
According to on-chain data, the supply of BTC on exchanges continues to fall as we move into 2022, which continues the downward trend from 2021. The “all exchanges reserve” is an indicator to measure the total amount of BTC held in exchange wallets. When the value of this moves up, more often than not, it’s a sign of selling pressure as more coins are deposited onto exchanges for withdrawal.
However, when this indicator moves down, the net amount of BTC being withdrawn from exchanges is higher, which is often perceived as a bullish trend implying that BTC is moving into the hands of strong holders taking their coins into cold storage. This often leads to a supply shock when more market entrants appear, serving to push the price of BTC higher.
The latest decline in BTC’s price goes hand in hand with the recent slump in U.S. equities. Flying in the face of the much-peddled narrative of Bitcoin as a “haven asset,” “store of value,” or “digital gold,” it seems, for now at least, that Bitcoin and the S&P 500 are dancing a tight tango. Both are considered risk-on assets and are jittery against uncertain macroeconomic factors and the potential increase in interest rates by the Federal Reserve. Lead Insights Analyst at Blockware, Will Clemente, tweeted on Jan 13, “Correlation to equities so strong might as well just be watching them.”
According to data from Delphi Digital, the correlation between Bitcoin and the S&P 500 is, in fact, around the highest it’s ever been as both assets react to the Fed’s continued hawkish comments. Curiously, Bitcoin has historically had a low or no correlation to the stock market. But, since 2020, as institutional adoption of digital assets increases, the correlation between asset classes has also increased. As more traditional players continue to enter the market, this is likely to remain the case.
The first month of 2022 has also seen Bitcoin’s dominance over the broader crypto market begin to climb once more, briefly reaching back over 40%. The number one cryptocurrency’s share of the market has been on the decline over the last few months due to a rising number of altcoins gaining in popularity. However, its rising dominance could be proof of the asset’s superiority and maturity against other altcoins in uncertain markets.
The Lightning Network, a layer 2 scaling solution for sending fast, effective Bitcoin payments, has seen explosive growth lately, with the number of Bitcoin Lightning Network nodes growing by 23% in the final quarter of 2021. The growth in nodes highlights the demand for BTC in everyday usage and proves that the asset can be used as it was initially intended, as a “peer to peer electronic cash system.”
This is just a handful of the many interesting facts about Bitcoin as the King of digital assets continues to surprise us every day. From a total recovery of hash rate to the continued strength of the network and a newfound correlation with the stock market, 2022 looks set to be an interesting year.
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