Crypto investors have been disappointed by the start of the new year.
Only one of the top 20 cryptocurrencies by market capitalization has increased in value in the last seven days. Chainlink takes the prize, with a 20% gain at the time of writing, according to CoinMarketCap. In the new year, all other leading coins have lost double digit percentages.
Bitcoin, the market leader, has had one of the more mild drops last week. It’s down 13% in the last seven days, and it’s currently trading at roughly $41,000. Despite the downturn, the Bitcoin network struck a new peak last Sunday, when it’s hashrate reached 203.5 exahashes per second (EH/s), before plummeting a few days later.
The unit of measurement for the total computational power of miners on a blockchain is hashrate. Higher processing power means more network security, because it takes more computing power to hijack 51 percent of the network and violate the distributed ledger’s values.
Since July of last year, when the network’s hashrate was sunk by a state-wide mining crackdown in China, Bitcoin’s new and temporary hashrate record signified a 200 percent rise in power.
Many Chinese miners moved to Kazakhstan, and the network grew stronger than ever. However, social turmoil in Kazakhstan earlier this week forced authorities to shut down internet connections across the nation, reducing the network’s hashrate to around 172 EH/s at the time of writing.
The US Securities and Exchange Commission postponed a decision on whether to approve or reject the New York Digital Investment Group’s proposal for a Bitcoin spot ETF on Tuesday (NYDIG). This year’s date has been changed to March 16th. NYDIG’s application joins Bitwise and Grayscale’s plans on the SEC’s backburner.
Last week, Bitcoin reached yet another significant milestone. The world’s most popular cryptocurrency’s market share had dropped to 37.28 percent on Wednesday. The new figure represents Bitcoin’s lowest market dominance since 2018, yet it still implies that one currency controls more than a third of the market.
Also on Wednesday 5th January 2022, the Federal Reserve of the United States hinted that its decision to raise interest rates and stop creating money could be postponed until mid-March. In the 24 hours following the revelation, bitcoin lost 6% of its value and crypto’s worldwide market valuation declined 6%. Stock prices have also dropped by more than 3%.
Ethereum and altcoins fared little bit
While Chainlink is on the rise, other so-called cryptocurrencies are in steep decline. Despite NFT sales surging to start the new year, Ethereum is down 19 percent from last week and currently trades at $3,030.
On Wednesday 5th January 2022, a group of analysts at investment firm JP Morgan said that Ethereum would face competition in the near future from other blockchains such as Avalanche, Solana, and Terra, which all provide more scalable services and lower gas rates than Ethereum. The Ethereum developers retaliated, claiming that the criticisms were overstated.
On the same day, crypto investment firm Electric Capital released research claiming that Polkadot, Avalanche, Solana, and Terra all experienced faster beginning growth in terms of active development than Ethereum when it was at a similar stage in its journey. It’s important to note that Ethereum grew up in a totally different market than its competitors.
Surprisingly, Solana, Avalanche, and Terra’s LUNA are among the worst performers this week, each losing more than 20% in seven days. Solana is presently trading at $134.50, down 23 percent in a week. Both Avalanche and LUNA have dropped by 29% to $80.27 and $63.69, respectively.
Although crypto has had a rough start to 2022, the excitement among crypto enthusiasts about what lies ahead has not dimmed.