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Crypto Tidbits: Bitcoin Surges to $7,000, COVID-19 Outbreak Brings Economy to Standstill, Ethereum DeFi Recovers


Another week, another round of Crypto Tidbits. After last week’s brutal showing, Bitcoin mounted a strong recovery over the past few days, rallying as high as $7,100 yesterday, marking an 85% gain from the $3,800 capitulation bottom. Altcoins followed suit by trending higher, but slightly underperformed BTC as the market continues to centralize amid times of uncertainty about the future of crypto firms. 
Bitcoin’s strength came amid a bout of weakness for the stock market. In fact, during this week’s Wall Street trading sessions, the Dow Jones and S&P 500 indices saw their worst weekly performance since the Great Recession of 2018. Simultaneously, the U.S. dollar exploded, crushing almost all foreign currencies while also hurting the value of gold and silver, the latter of which saw a massive drawdown.
This latest leg lower comes as the outbreak of the novel coronavirus disease COVID-19 has spread across the world, resulting in an exponential explosion in cases in world economic hubs like the U.S., the U.K., Spain, and so on and so forth. Namely, millions have been locked at home, businesses have been forced to shut down, and consumer demand has dropped extremely low.

Considering this backdrop, it’s somewhat surprising that Bitcoin and the rest of the crypto industry saw such a relatively strong week, both in terms of price action and in terms of the fundamentals.
Related Reading: Crypto Tidbits: Bitcoin Plunges 50%, COVID-19 Cases at Ethereum Event, Central Banks Inject Billions
Bitcoin & Crypto Tidbits

Bitcoin Hash Rate Drops 40% From High: According to the latest data from Blockchain.com, the hash rate of the Bitcoin network — how much computational power is being allocated to securing the network — has dropped some 40% from the all-time high established near the end of February. More specifically, the hash rate dropped from the 136 terahashes per second high to 82 terahashes just the other day. The drop in hash rate was further corroborated by the below tweet from Digitalik, a Bitcoin data scientist, who noted on Thursday that he noticed that a mere 40 blocks were mined in a 12-hour period, which is almost 50% fewer blocks than a normal period.
Ethereum Used as a Mechanism to Bypass China’s “Great Firewall”: The purpose of Bitcoin, Ethereum, and other cryptocurrencies have long been questioned by its critics. Recently, this critique was answered in an interesting way: according to Sarah Zheng of the South China Morning Post, excerpts of an interview with a Wuhan doctor banned by the Chinese government were published on the Ethereum blockchain “in an apparent pushback against online censorship.” The transactions involving these excerpts were not given.

my WeChat timeline is still going strong with versions of Dr. Ai Fen’s interview, incl this version explaining how it was posted on Ethereum blockchain and another told in QR code excerpts https://t.co/uYFKpCtsgM pic.twitter.com/kP9kf6t5fV
— Sarah Zheng 鄭雅儒 (@_szheng) March 11, 2020

Why Bitcoin & Crypto Matters: Cash Crunch In the U.S. As Coronavirus Fears Spread: As aforementioned, the spread of COVID-19 has begun to have a tangible impact on the Western world. In fact, according to a March 18th report from the Wall Street Journal,  banks are starting to run low on physical cash as consumers make large withdrawals of “tens of thousands of dollars [in cash] at a time.”  This has resulted in multiple social media reports online of banks restricting withdrawals, which has been corroborated by press statements from companies themselves. The issue has been further compounded by the fact that banks are closing their doors and/or changing their hours. JP Morgan, for instance, is shutting down 1,000 Chase branches (20% of the total) to help reduce the spread of coronavirus. Many have argued that Bitcoin and cryptocurrencies are a perfect solution to this matter, as digital assets allow one to become their own bank through the mechanism of private keys, which ensures that anyone can “be their own bank.”
Central Banks and Governments Go Wild With Money Printing: Due to the economic and financial crisis that is in the midst of forming, the White House and the Federal Reserve (along with the central banks and the governments of world) have been forced to react with extreme measures. At the end of the Federal Reserve, the central bank has pledged to complete $700 billion worth of quantitative easing of bonds and mortgage-backed securities, has abolished reserve requirements, and has cut its policy interest rate by 1%. The White House has announced plans to issue every American a check of at least $1,000 to ensure they can pay their bills while also bailing out companies, potentially even large corporations like Boeing. The consensus is that this stimulus will be bullish for Bitcoin. BitMEX Research, for instance, wrote:

In our view, in this changed economic regime, where the economy and financial markets are set loose, with no significant anchor at all, not even inflation targeting, it could be the biggest opportunity Bitcoin has seen, in its short lifetime.

Ethereum DeFi System Attempts to Restabalize: Last week, the decentralized finance system was dealt a major blow when Bitcoin, Ethereum, and other cryptocurrencies fell off a cliff, so to say. Their values tanked by dozens of percent within a day’s time, resulting in chaos in the DeFi market due to the simultaneous congestion of transactions on the Ethereum blockchain. This confluence resulted in MakerDAO, a decentralized system that allows users to collateralize ETH and some ERC-20 tokens for loans paid out in the DAI stablecoin, failing to liquidate loans properly. To account for this issue, MakerDAO has conducted auctions of its native token, MKR.

Featured Image from Shutterstock


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