Bitcoin has passed its first significant liquidity stress event, meaning the flagship could withstand the recent periods of stress, including the collapse of some major US banks. This marks a crucial step for the cryptocurrency, which proponents expect will become a global reserve asset.

Bitcoin Gains 20% Despite Interbank Borrowing Rate Spiking to 60bps

Bitcoin’s monetary properties did not shelter it from sharp declines during previous liquidity crises. For instance, the leading cryptocurrency dropped 50% in two days in 2020 as global markets retreated from the quickly spreading coronavirus, disproving the narrative that Bitcoin provided a hedge against a pandemic.

Similarly, Bitcoin lost half its value in February and March last year as the so-called FRA-OIS spread, which measures the gap between the U.S. three-month forward rate agreement and the overnight index swap rate, spiked to 78bps.

However, as the interbank borrowing rate climbed to 60bps, the third-highest since the Global Financial Crisis, Bitcoin saw more than 20% gains. “As a hedge against the inherently unstable fractional reserve banking system, Bitcoin has passed a crucial test,” Bloomberg Intelligence said in a recent report.

Bitcoin Gains 70% in Q1 Despite Regulatory Pressure

Despite a regulatory crackdown in the US, Bitcoin had its second-best quarterly performance in a decade. More specifically, the flagship cryptocurrency has gained 70% in the first quarter of the year, which suggests another significant shift for the network, Bloomberg Intelligence argued, adding:

“Although prior regulatory determinations protect the network from Securities Act-driven enforcement, it appears that the Fed, regulators, the White House and industry are making an effort to choke off-ramps into the asset.”

The report claimed that the increasing regulatory scrutiny in the US could force crypto businesses to move to other jurisdictions, with the EU, Singapore, Canada, the Middle East, and Hong Kong as the front runners.

Likewise, top Coinbase lawyer Daniel Seifert said in a recent blog post that the increasing regulatory scrutiny in the US, specifically an aggressive crackdown by the SEC, has even stretched to major cryptocurrency exchanges like Coinbase, which could push the crypto sector off-shores.

“The US has left a vacuum that other countries are eager to fill. We are proudly an American company. It’s hard to sit by and watch the US squander the opportunity it has been given.”

Bitcoin Hashrate Remains High

Despite increasing regulatory clampdown in the US, the Bitcoin network continues to attract miners. The network’s hashrate, which refers to the computational power used to process and validate transactions, has grown by 25% year-to-date, increasing confidence in its security.

At the end of February, the Bitcoin network’s computing power reached its all-time high of 320 EH/s. Data from Luxor Technologies shows that the hashrate gained 100 EH/s within around one year, twice as fast as it went from 100 EH/s to 200 EH/s.

Decentralized and distributed nodes, miners, and users make Bitcoin more resilient than traditional finance. The hashrate doubling during the 2022 bear market and an exceptional start this year “is indeed impressive,” Bloomberg Intelligence said.

This article originally appeared on The Tokenist

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