Bitcoin’s mining difficulty hits new high as tokenised BTC offerings grow
DATA from CryptoCompare shows that the price of Bitcoin surged nearly 7% over the past week after a significant drawdown seen earlier this month, to now trade at around $58,600.
The cryptocurrency saw a high above $60,500 over the week, but has since corrected.
Ethereum’s Ether, the second-largest cryptocurrency by market capitalization, lost around 0.1% of its value over the past week, despite seeing an initial surge as Bitcoin’s price recovered and seeing a rise to over $2,400, it has since endured a significant correction to around $2,300.
Headlines in the cryptocurrency space this week revealed that spot Bitcoin exchange-traded funds (ETFs) saw their longest run of daily net outflows since they were launched in January of this year, as investors pulled nearly $1.2 billion out of these funds in the eight days ending September 6.
That period saw the price of Bitcoin plunge, but according to Bloomberg Senior ETF analyst Eric Balchunas, the growth of these funds is “going to be two steps forward, one step back” as “that’s the way many ETF categories are born and mature”.
The analyst added that nothing “goes up in a straight line” because ETFs “service long term investors and traders.” While investors went risk-off as the cryptocurrency’s price dropped, Bitcoin’s mining difficulty rose 3.5% to a new all-time high of 92.67 trillion.
According to available data, the metric, which has been steadily rising, often tends to mirror expectations of directional price changes, and has been rising even amid a Bitcoin price correction.
CoinShares’ Bitcoin research lead, Christopher Bendiksen, has warned that the record-high difficulty coupled with the cryptocurrency’s recent halving event, which cut the Coinbase reward miners receive per block found in half, is creating a “challenging” environment for many miners, which could struggle to remain cash flow positive.
Historically, Bitcoin's price has often declined following a halving event but then rebounded to new highs several months later. Bendiksen suggested that miners are “speculating on a significant increase in the Bitcoin price”. If it fails to materialize, there could be “trouble ahead for some operations”.
Coinbase launches new wrapped Bitcoin token cbBTC
Over the week, Nasdaq-listed cryptocurrency exchange Coinbase introduced a tokenized version of the flagship cryptocurrency Bitcoin, cbBTC, on both Ethereum and Layer-2 network Base.
The move sees Coinbase enter a market segment that is currently dominated by BitGo’s wrapped Bitcoin (wBTC) and has over $8 billion in market capitalization. Coinbase’s cbBTC is backed 1:1 by Bitcoin held by Coinbase and various DeFi protocols, including Aerodrome, Curve, Aave, Sky Protocol, Compound, Maple, and deBridge, are already supporting it.
This support has meant that cbBTC’s market capitalization surged to over $100 million on its first day, but some criticized the token as users suggested the exchange can “freeze and blacklist addresses transacting with cbBTC directly via the smart contract,” while BitGo can’t do the same for wBTC addresses.
Meanwhile, asset managers State Street Global Advisors and Galaxy Asset Management have launched three new cryptocurrency ETFs designed to tap into the burgeoning Web3 market. The funds offer diversified exposure to blockchain technology through a combination of stocks and cryptocurrencies. These include the SPDR Galaxy Digital Asset Ecosystem ETF (DECO), the SPDR Galaxy Hedged Digital Asset Ecosystem ETF (HECO), and the SPDR Galaxy Transformative Tech Accelerators ETF (TEKX).
This week also saw PayPal and Venmo announced an integration with the Ethereum Name Service (ENS), allowing users to send and receive crypto using human-readable names instead of complex wallet addresses.
UK government introduces new bill to clarify digital assets’ legal status
The UK government has introduced a bill in Parliament aimed at clarifying the legal status of digital assets, including cryptocurrencies, non-fungible tokens (NFTs), and tokenized real-world assets (RWAs).
The proposed legislation seeks to establish these assets as personal property under British law, providing much-needed guidelines for the legal profession and offering greater protection for individuals and businesses involved in the digital asset space.
Central to the bill is the creation of a new category of property, distinct from the existing categories of "things in possession,” which covers items such as money and cars, and "things in action,” which covers debt and shares. The new category, “things,” will allow certain digital assets to be subject to personal property rights, according to Justice Minister Heidi Alexander.
The government's proposal follows a consultation conducted by the Law Commission earlier this year that concluded that while some digital assets do not fit into the traditional categories of property, they should nonetheless be treated as capable of being subject to personal property rights.
Francisco Memoria is a content creator at CryptoCompare who’s in love with technology and focuses on helping people see the value digital currencies have. His work has been published in numerous reputable industry publications. Francisco holds various cryptocurrencies.
