BTC Network Sees Largest Difficulty Drop in Two Years

Chart of the Day 

Asian stocks retreated as investors reacted to the surprisingly strong US service data, which fueled speculations about the Federal Reserve’s decision to retain a higher terminal rate. The dollar remained largely unchanged and Treasury yields were steady. 

The broader crypto market fell along with riskier assets amid concerns that inflation is not slowing enough. As of the time of writing, BTC manages to defend the $17k handle despite a 1.7% drop in the last 24 hours. Similarly, ETH retraces to the $1,260 region after posting a steeper loss in the same period. Mid-to-large-cap altcoins have largely flipped red, with the exception of AXS, which defied the broad-base correction with a double-digit percentage loss. 

The prospect of the crypto market remains bleak. On the investment side, crypto fundraising experienced the toughest month since the last bearish cycle. Total financing dropped by 84% year-on-year. Out of the total funding, 33.4% went to CeFi, followed by 27.1% to infrastructure, and 17.2%  to web3. DeFi’s total funds raised trails behind NFT despite an early head start. 

Talk of the Town 

The Bitcoin network experiences the largest drop in mining difficulty since the miner exodus in 2021. The network’s difficulty is down 7.2%, indicating tough mining economics facing many large firms as profit margins continue to tighten amid soaring energy costs and abysmal spot prices. The significant change in difficulty adjustment is likely due to the shutting down of rigs that are no longer making profits. Analysts believe that the industry could see difficulty dropping further in the following months with more rigs going offline.