- Bitcoin hashrate has registered its highest percentile decrease since the network went live in 2009.
- Institutional investors are wary of the current bear market, but they still see BTC as a good investment.
- Altcoins are displaying favorable perceptions by the new wave of investors.
- Institutional capital outflows are starting to ameliorate.
Bitcoin made a splash the past month as new narratives changed investors’ perceptions of the token. Retail investors have capitulated and financial incentives have failed to offer similar advantages. In addition, Bitcoin’s volatility re-emerged as China enforced stricter trading and mining regulations, creating further market uncertainty. With the exodus of miners from China, the global Bitcoin hashrate suffered a landslide in the past month which, corrected by 29%, is the highest hashrate rectification since the network’s inception.
Bitcoin Hashrate Drops to a Record Low
Bitcoin’s hashrate corrects every 2,178 blocks, which is roughly every 2 weeks, given the hashrate difficulty. The latest correction saw Bitcoin correct by 29%, representing the highest hashrate rectification since the network’s inception. However, the Wolf of All Streets argued in a tweet that the network is unaffected despite losing 60% of its power.
The lower hashrate did not affect the efficiency of the network, only altering block creation times. The Block reports that in the past two weeks, blocks creation averaged 13.9 minutes, while the measure was at 10 minutes per block. However, on July 1st, given the high hashrate alteration, a block was mined in 129 minutes, marking a network record since 2011.
Still, despite uncertainties in network efficiency, Bitcoin and other cryptocurrencies are bringing investors towards digital assets. JP Morgan analysts argue the market shows signs of healing from a financial standpoint while BTC accumulation from whale accounts indicates investors are expanding.
Why Are Institutional Investors Still Buying?
Coinbase’s success is the first display of crypto acceptance connecting the gap between retail and institutional investors. Institutional approval is revealed by the growing demand for crypto investment opportunities. In the US, over 650 banks will offer crypto purchases to over 24 million customers. Additionally, Germany promulgated a law to allow chunks from “domestic special funds” into crypto assets. As a result, it is reported that over 350 Billion Euros will enter the market.
In contrast, when crypto is experiencing downward momentum, high capital investors enter the market. George Soro, for example, reportedly gave the “green light” to trade Bitcoin and other cryptocurrencies. Frederick Kaufman argued that “our lives converge ever more closely with the digital universe,” and institutions are becoming more aware of the cultural demand for digital inclusion. Entry into the market by known investors creates more demand for currencies, with one wallet adding over 163,000 BTC to a single address.
Regardless of how the market is framed, investors are becoming accustomed to crypto. In an interview with Tone Vays, trader Willy Woo emphasized key institutional investors are “accumulating their coins.” As a result, the market sentiment might be low; however, investors have identified the potential of the digital-gold in the emerging digital economy. Still, according to CoinShares, investors currently remain cautious about Bitcoin in the foreseeable future.
On the Flipside
- JP Morgan highlights, there is more potential for downside before capitulation occurs.
- institutions are still cautious of investing large amounts of their portfolio into crypto as the market is showing strong signs of volatility
- Ethereum is more favored by institutional investors than Bitcoin.
- Bitcoin outflows registered a record of $141 million in the past week.
Institutions Are Eying an Opportunity
Catching onto trends is a determinant for leading the new technological shift. Additionally, it is a financial consideration that helps businesses develop. Crypto’s usability is emerging as financial institutions are acknowledging the value of digital assets.
CBDC’s are the new conjunction between blockchain and economic models, as those failing to adopt new means of payment could be left behind. Digitization overcomes previously stagnant business models, with neobanks and cryptocurrencies taking the central stage. In that regard, growing interest from investors is a response from both governments and institutions to acknowledge digital payments as an upcoming payment standard.