Category Archives: Bitcoin
How would a US recession affect Bitcoin? – Decrypt
Appearing on NBCs Today show this morning, US Federal Reserve Chairman Jerome Powell said, We may well be in a recession. He ascribed the countrys economic downturn to the coronavirus, the global pandemic that has infected over half a million people and has billions on lockdown.
As the coronavirus started sweeping through the US, it battered the US economy and crashed global markets. Bitcoin was not exempt. At one point, the price of BTC sunk to a low of $4,100, its worst price since March 2019, before recently recovering to around $6,600 as stocks have ticked back up.
But if Bitcoin collapsed in sync with the rest of the market, how will it do if America sinks into a deep recession?
A recession constitutes two quarters of successive decline in gross domestic product (GDP).That looks likely in the US. A staggering 3.3 million US citizens filed for unemployment benefits last weeka record high. Late last night, a two trillion-dollar stimulus package to help the economy keep afloat during the crisis was approved by the US Senate and will move to the House of Representatives for a vote.
But Powell told NBC theres a difference between this recession and a normal recession: There is nothing fundamentally wrong with our economy. Quite the contrary. We are starting from a very strong position.
According to Pankaj Balani, CEO of Delta Exchange, the Bitcoin market is equally healthy. The key difference in this crisis, though, is the speed of price movement. Whatever happened in five months in the mortgage crisis happened in five days in the corona crisis. Hence, the recovery should also be a lot faster, he told Decrypt.
Though Bitcoin earlier this month fell along with global markets, Balani predicted that as markets settle we will see assets decouple from one another and prices will be driven by idiosyncratic risks instead of systemic risks.
Bitcoin may even benefit from a recession, said Balani. Central banks like the US Federal Reserve finance stimulus packages by increasing the monetary supply. This will put pressure on currencies and can turn out to be positive for Bitcoin prices in the medium to long term, he said.
Simon Peters, a market analyst at trading site eToro, agreed. He told Decrypt, Due to the Fed announcing unlimited [quantitative easing], investors could soon be looking to BTC as an inflation hedge against a depreciating dollar.
He added that investors are also less likely to sell Bitcoin because of the upcoming halving event. Its slated to occur sometime around the middle of Maywhereupon the supply of Bitcoins issued as mining rewards will halve, due to a feature hardcoded into the Bitcoin protocol. Some investors predict the halving to lead to a rise in the price of Bitcoin. The event theoretically should reduce selling pressure from miners, said Peters.
Theres another reason a US recession might not be bad for the crypto economy, noted Peters: The coronavirus originated in China, which has since contained the virus and is beginning to resume economic production. Much of Bitcoins hash power is concentrated in Chinaa staggering 54% of hash power is controlled by Chinese miners alone, according to a December 2019 report by CoinShares. Consequently, said Peters, We can expect mining operations, and in particular the network hashrate, to start picking up from the recent slump.
These conditions could in fact be a perfect storm for Bitcoin's next bull market, resulting in some positive moves at the end of this year and into 2021, he concluded.
But, in terms of the American economy as a whole, US President Donald Trump doesn't want to wait that long. Hes hoping the US economy can be humming back along by Easter. But as the countrys leading infectious disease expert, Dr. Anthony Fauci, told CNN, You dont make the timeline; the virus makes the timeline.
In the case of Bitcoin, the protocol makes the timeline.
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How would a US recession affect Bitcoin? - Decrypt
Just Like Bitcoin Before It, Cardano Is Banned From Wikipedia – Cointelegraph
On March 24, Cardano (ADA) founder, Charles Hoskinson, streamed a YouTube video titled On Wikipedia, in which he berated Wikipedia for applying arbitrary commercial censorship against Cardano.
Censorship of cryptocurrency projects is as old as the industry itself. Back in 2010, even Satoshi Nakamoto was frustrated with Wikipedias editors for removing Bitcoins wiki entry several times.
After PayPal severed ties with WikiLeaks, one of Bitcoins supporters suggested that becoming the site's new source of donations would generate enough publicity to gain entry into Wikipedia. Satoshi strongly opposed WikiLeaks adoption of the cryptocurrency, but it was too late:
No, don't "bring it on". The project needs to grow gradually so the software can be strengthened along the way. I make this appeal to WikiLeaks not to try to use Bitcoin. Bitcoin is a small beta community in its infancy. You would not stand to get more than pocket change, and the heat you would bring would likely destroy us at this stage.
Hoskinson states that he does not know the rationale behind Wikipedias hostility towards his project, despite it being the most cited of all of the peer reviewed coins:
We don't know why there's hostility where coins like SpankChain can have an article on Wikipedia. A lot of other cryptocurrencies and top 15, top 20 apparently have articles and that's perfectly fine. But then we're not allowed to have an article for some reason, even though we've been mentioned by the U.S. Congress.
Cointelegraph could not find a Wikipedia article for SpankChain (SPANK). Other projects like Dogecoin (DOGE), GridCoin (GRC), and PotCoin (POT) do have one, however. Most of the top ten projects, including Bitcoin Cash (BCH), have one too.
Source: Cointelegraph
Hoskinson confirmed to Cointelegraph that the censorship comes exclusively from Wikipedias English language editors, noting that there are Cardano wiki entries in German, Estonian, Italian, Japanese, Dutch, Portuguese, Romanian and Russian.
Crypto censorship has recently been on the rise. In Wikipedias case, it is an especially surprising move, considering that the site accepts Bitcoin to help fund its mission of providing a free online encyclopedia, created and edited by volunteers around the world
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Just Like Bitcoin Before It, Cardano Is Banned From Wikipedia - Cointelegraph
Feds Unlimited QE Places Spotlight on Bitcoin Store-of-Value Narrative – Cointelegraph
As the COVID-19 pandemic continues to unfold with dire consequences across the globe, desperate measures to keep the economy afloat continue to be taken by world governments. Currently the most notable example is the U.S., which recently announced an unlimited quantitative easing program and also reached an agreement for a $2 trillion stimulus package.
The unlimited quantitative easing process will entail the Federal Reserve purchasing assets in the amounts needed to support smooth market functioning and after the announcement was made Bitcoin (BTC) price rallied almost 10% from $6,300 to $6,900.
At the moment, Bitcoin has dropped to $6,630 and crypto markets have remained fairly stable throughout the day.
Crypto market data. Source: Coin360
Gold and silver have also recovered after several days of losses. Gold price dropped by more than 12% in 10 days but has since recovered to the $1,620-$1,680 price range seen between February 20 and March 9.
SILVER USD/m2 chart. Source: TradingView
Meanwhile silver has hit its generational low against the US dollar when money supply adjusted, a figure to keep in mind while the Fed prints billions of dollars. In the last 3 days, silver has seen modest gains, surging from $12 to $14.5.
As the U.S. government sets out to spend billions of dollars this week, stock markets reacted positively and the S&P 500 rallied over 9% on March 24, the biggest daily surge since 2008. The Feds QE efforts may prop up stock prices for now but the long-term consequences will likely have a significant impact on the economy for years to come.
While stock markets are currently reclaiming some of the ground lost during the past two weeks, the worst may be yet to come as the total impact of the Coronavirus and its effects on the population and on the economy are not yet visible.
At the time of writing the number of newly confirmed cases is growing at an alarming rate. Just yesterday, in the U.S. the number of confirmed cases grew by 10,270 to a total of 54,453. At this rate, the total number of confirmed cases in the U.S. may soon overtake Chinas.
Cumulative total number of COVID-19 cases in the U.S. Source: CDC
As for Bitcoin price, it is showing stability and painting higher highs and lower lows on the daily time frame. It seems likely that Bitcoin will continue to hold its own as the dollar inflates, although its worth noting that today's difficulty adjustment may cause the digital asset to lose value as mining becomes cheaper.
BTC USD daily chart. Source: TradingView
To the surprise of many investors, precious metals had been falling alongside global equity markets which on March 9 saw their worst performance since the 2008 financial crisis. However, this isnt entirely new for gold or silver.
In 2008, safe-haven assets behaved similarly, dropping alongside stocks and rallying after the announcement of the Fed's quantitative easing program. For the time being, gold and silver seem to be back to providing security for traders and Bitcoin has been following the lead by holding its own in what could be its biggest test as a unique asset class so far.
The Feds unprecedented new measures highlight one of the primary value propositions of decentralized cryptocurrencies like Bitcoin, the issuance rate cannot be tampered with.
As the current global financial meltdown has demonstrated, precious metals also have their weaknesses. On March 23, three of the worlds largest gold refineries announced that they would stop production for at least a week in order to comply with requests by local authorities. How this will weigh on price is yet to be determined.
Bitcoin, on the other hand, operates on a decentralized system that ensures that no geo-specific event can alter its production. Unlike precious metals, Bitcoins system allows miners to leave and join the network without severely impacting the amount of Bitcoin mined.
Over the past month the U.S. Dollar has also seen steady gains throughout the crisis due to the market participants quick exit from stocks and other risk-on assets. So far DXY has risen 6.35% in March but it has fallen by nearly 1% since the Feds announcement of unlimited QE.
Coincidentally, Bitcoin is set to have its next halving event in April which will lower its issuance rate drop from 12.5 BTC to 6.25 BTC every ten minutes. This means the supply will increase less than 2% per year, and will drop to less than 1% after 2024, a rate which is similar to the average rate of increase of the gold supply.
As the Fed sets out to print an unlimited supply of dollars, Bitcoin is in a prime position to become the next ultimate store of value currency as its issuance rate remains relatively unaffected by the COVID-19 pandemic and the upcoming halving continues as programmed.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
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Feds Unlimited QE Places Spotlight on Bitcoin Store-of-Value Narrative - Cointelegraph
Are Miners Waiting for Bitcoin to Hit Breakeven Point? – Cryptonews
Source: Adobe/KittyKat
Johnson Xu is the Chief Analyst at TokenInsight, a token data and rating agency._____
The sharp market downturn in mid-March 2020 forced some Bitcoin (BTC) miners to switch off their mining rigs. As a result, the Bitcoin network hash rate plummeted to ~75.8 EH/s. After reaching its lowest recent point, down from its all-time high of ~136 EH/s, the network hash rate is currently hovering at ~100 EH/s.
Consequently, we have seen a fall of almost 16% in mining difficulty, resulting in the second-largest drop in history.As the price plummeted yet lower, the network has seen a surge on its mean block interval from roughly 10 minutes per block to 15 minutes per block before the scheduled network adjustment kicks in.
The MRI (miner's rolling inventory) provides valuable insights into how miners perceive the market.Prior to the market downturn (March 11, 2020), the MRI reflected the fact miners appeared conformable to sell, indicated by a >1 MRI. When the market stabilized, after bitcoin crashed to sub-USD 4,000 at its lowest ebb, the daily MRI dropped significantly to < 1.
That indicates a very different view from miners on the condition of the market, and means they are holding back on bitcoin and their inventories are growing (Bytetree, 2020). At the time of writing, the daily MRI is running at around 1 (or 100%).Miners are still comfortable selling into the market in the longer run, as demonstrated by the 1 week, 5 weeks and 12 weeks MRI ratios.
The recent market downturn has caused some miners to switch off their rigs, as indicated by the recent ~16% downward adjustment on network mining difficulty.
However, 1-week fees are slowly creeping up to 52-week fee levels, despite the recent market downturn. Rising fees reflect increasing network activity, which could well be a positive indicator for the bitcoin market.
The SOPR (Spend Output Profit Ratio) ratio, developed by Renato Shirakashi, is one of the many insightful indicators that help analysts gauge market participants sentiment and behavior.
This ratio dropped significantly to <1 during the recent market downturn, and backed up to near 1 when the market stabilized.
However, the ratios upward turn faces some difficulty in its quest to break the >1 mark strongly. This could be an indicator that market participants are waiting to hit the breakeven point before they sell.
Theoretical 24-hour attack costs have dropped significantly recently, and currently sit at USD 14 million. This does sound alarming, especially when we can see a large drop in 24-hour attack costs.
However, it is practically impossible to perform a 51% attack on the Bitcoin network, as an attacker cannot solicit enough hash power to perform such an attack, due to the following reasons:
All of the above is true unless we discover a direct channel, which could let an attacker to control 51% hash rate effectively. The risk of a 51% attack on the Bitcoin network is extremely low and such an operation is extremely difficult to realize.
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Are Miners Waiting for Bitcoin to Hit Breakeven Point? - Cryptonews
Vitalik Proposes Solution to ‘Embarrassing’ Lack of BitcoinEthereum Bridge – Cointelegraph
Ethereum co-founder Vitalik Buterin posted a tweet on March 24 claiming that the continuing lack of easy movement between the Ethereum and Bitcoin networks was embarrassing.
As a solution, he proposed putting resources into building a decentralized exchange (DEX), to act as a trustless bridge between the two.
Buterins plan calls for the DEX to be trustless and serverless, with a user experience very similar to Uniswap. Uniswap is a decentralized exchange that runs without an order book, instead relying on asset pairs with Ether as a fixed base currency.
As Cointelegraph reported, Uniswap has just announced plans to release a V2 update in Q2 2020, which will allow direct token-to-token swaps.
Decentralized exchanges have struggled to gain market share against traditional exchanges, despite being more closely aligned to the overall trustless ethos of cryptocurrency. Part of the issue has been a lack of liquidity, although a dedicated BitcoinEhereum DEX supported by Buterin may well see greater uptake.
Vitalin suggested further suggested that Bitcoin was not the only potential destination for a DEX bridge from Ethereum, and other blockchain ecosystems should also be up for consideration.
Buterin specifically mentioned Zcash as one example, saying that he has already had discussions to this end with Zooko Wilcox, CEO of Zcash-creators, the Electric Coin Company. However, he admitted that they could both work harder to turn such talk into action.
Originally posted here:
Vitalik Proposes Solution to 'Embarrassing' Lack of BitcoinEthereum Bridge - Cointelegraph
Bitcoin Will "Come Of Age" During This Crisis: Top Investor Explains Why – Blockonomi
Theres no hiding the fact that Bitcoin, at least in terms of its price, has underperformed amid the ongoing crisis unfolding around the world, caused by the coronavirus shutdowns the worlds governments have implemented.
Since the February highs at $10,500, the cryptocurrency has fallen to $6,500, marking a loss of just under 40%.
Despite this, there are a number of prominent analysts who think that Bitcoins fundamentals will only strengthen through this crisis.In fact, in a recent analysis, long-time market veteran Dan Morehead went as far as to say that during this crisis, Bitcoin will come of age.
Over the past few weeks, the global economy has spiraled into chaos; amid the coronavirus outbreak, unemployment claims have skyrocketed to record levels, prominent investment firms are projecting potentially Great Depression-level GDP contractions, and the stock market has seen its fastest crash in history, losing over 30% in a matter of a few weeks.
Due to this, governments and central banks have been forced to respond with their most drastic measures available boosted unemployment benefits, tax holidays, free money for all citizens, trillions of dollars worth of quantitative easing, and negative interest rates are amongst the measures being taken by the worlds authorities to try and save the flagging economy.
According to Morehead, this trend towards unorthodox monetary and fiscal solutions will be astronomically bullish for Bitcoin and some other assets. As he wrote in his companys latest newsletter:
As governments increase the quantity of paper money, it takes more pieces of paper money to buy things that have fixed quantities, like stocks and real estate, above where they would settle absent an increase in the amount of money. I think they will do that. The corollary is theyll also inflate the price of other things, like gold, bitcoin, and other cryptocurrencies.
He added that with the government deficit in the trillions, it will have a positive impact on the price of things not quantitatively-easable stocks, real estate, cryptocurrency relative to the price of money. Said another way, the BTC/USD cross-currency rate will rise.
With the backdrop set for Bitcoin, Morehead concluded in his letter by remarking that the leading cryptocurrency will likely set a new price high in the next 12 months, adding that rapid growth that some bulls expect is not going to happen overnight.
This was echoed by Raoul Pal ex-head of Goldman Sachs equity derivatives business and the current CEO of Real Vision who told an interviewer that he thinks the price of Bitcoinwill rally to its $20,000 all-time high within the coming 12 to 18 months.
This interview was released shortly after he remarked that he is more bullish than ever on Bitcoin, remarking that theres a possibility that all trust in the entire system has been lost. This was presumably in reference to the worlds response to the outbreak of COVID-19, which has revealed clear insecurities in the fabric of society, from politics to finance.
As to why it will take around 12 months for Bitcoin to reach new highs, Morehead explained:
My best guess is that it will take institutional investors 23 months to triage their current portfolio issues. Another 36 months to research new opportunities like distressed debt, special situations, crypto, etc. Then, as they begin making allocations, those markets will really begin to rise.
Indeed, with the three primary asset classes stocks, bonds (rallied, then crashed hard), and commodities all underperforming in tandem in the crisis, investors may begin to seek alternatives, cryptocurrencies included.
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Bitcoin Will "Come Of Age" During This Crisis: Top Investor Explains Why - Blockonomi
Algorithmic Crypto Art Changes Appearance to Reflect Bitcoin Volatility – Cointelegraph
A San Francisco-based experimental art movement has created what they describe as an autonomously programmed art piece that changes appearance as the price of Bitcoin fluctuates.
Asynchronous Art revealed Matt Kanes Right Place & Right Time today, an artwork that evolves dynamically in response to BTC price action. As the value of the cryptocurrency changes, so too does the artwork, explained Kane:
"Each day, a new look for the Master is generated using a data feed of Bitcoin's last 24 hours of price action. Each hour's price programmatically controls rotation, scale, and position of a correlating layer."
The complete piece is referred to as the Master in async.arts parlance, because individual Layers discrete aspects of the piece are independently controlled.
Right Place & Right Time (Low volatility)
Right Place & Right Time (Bullish)
In a previous instance of this unusual artistic collaboration, the thirteen layers of First Supper were individually auctioned to different collectors. So while one collector owns the Master (which was sold for 103.4 ETH, a crypto art record), the owners of the Layers themselves can update and change them whenever they see fit.
First Supper, by thirteen artists, rendered on March 23rd at 8:23am ET
Some of the elements that can be changed include characters, walls, and the table in the artwork. Some Layers can change outfits, others can substitute faces, and still others can change size or orientation. async.art notes that this enables over 54 billion distinct state changes in the piece.
The individual Layers were sold for a total of 263 ETH, suggesting that collectors value the opportunity to have direct input into the appearance of the Master artwork.
In the case of Right Place & Right Time, the artist retains control of the Layers, which are controlled by API calls.
Kane explained that "I want to keep the artwork fresh and surprising for both collector and viewers as price volatility is visualized and maintain this as a living work-in-progress. Additionally, when Bitcoin's price reaches key levels, that achievement is recorded as part of the artwork that day."
async.art founder CEO Conlan Rios said that We are now truly on track to impact the art world it reinforces the fact that the entire NFT community believes in this movement.
The new piece will be unveiled at a virtual gallery showcase event, Citadel 6.15, hosted by crypto artist Coldie and opening on March 27th in the Cryptovoxels world.
Cointelegraph Magazine has been focusing on the crypto art movement this week, in a series of features exploring ephemerality, art communities and collaboratives, and censorship.
Original artworks by Cointelegraph artists will be on display at the exhibition, alongside works from noted crypto artists including Coldie, Hackatao, AlottaMoney, XCOPY, Josie Bellini, Shortcut, BlackBoxDotArt, MLIBTY, TwistedVacancy, Matt Kane, Rutger van der Tas, Vans Design, and Connie Digital.
More information on Cointelegraph Magazine Art Week and the Citadel 6.15 Virtual Art Show can be found here.
(Artworks courtesy async.art)
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Algorithmic Crypto Art Changes Appearance to Reflect Bitcoin Volatility - Cointelegraph
Heres How To Predict Major Moves In The Price Of Bitcoin – Forbes
Bitcoin has been swinging wildly over recent months, seeing even higher volatility than usual.
The bitcoin price, which has had all of its 2020 gains wiped out by panic sparked by the spreading coronavirus, fell to 10-month lows earlier this month only to rebound sharplyand is now trading at around $6,000 per bitcoin.
Bitcoin and cryptocurrency investors are keenly watching for any signs of further volatility with one analyst pointing to "large increases in exchange inflows" as heralding extreme bitcoin price moves.
The bitcoin price has fallen heavily in the face of a broader coronavirus-related market sell-off, ... [+] with some warning bitcoin is failing to act as a so-called safe-haven asset.
"Large increases in exchange inflows have proven to be a good indicator of increased volatility, so we recommend keeping an eye on the amount being transferred to exchanges," Philip Gradwell, the chief economist at New York-based bitcoin, crypto, and blockchain research company Chainalysis, wrote in a blog post this week.
Bitcoin and crypto exchanges saw their daily inflows increase by 250% during the second week of March compared to their 2020 average, according to Chainalysis research.
From March 9 to March 16, exchanges around the world received 1.1 million bitcoin per day, 712,000 bitcoin more than average with trading activity increasing as bitcoin flowing into exchanges was sold.
Chainalysis found that bitcoin trading was driven primarily by new bitcoin entering exchanges, rather than bitcoin already held on exchanges.
"The majority of excess bitcoin arriving at exchanges has been sold, and the worst of the oversupply appears to be finished for now," Gradwell wrote, adding that due to the "uncertainty around the COVID-19 pandemic, its hard to predict where the bitcoin market will go next."
"We also expect that professional traders will continue to drive events, as opposed to retail exchange users, simply because they are responsible for much larger volumes," Gradwell wrote.
Bitcoin exchange inflows rose dramatically during the second week of March, just ahead of the ... [+] bitcoin price taking a huge step downward.
Last month, ahead of bitcoin's coronavirus-related plunge, research found bitcoin's early 2020 rally was being driven by long-awaited institutional investors buying up bitcoin.
At the peak of 2017's epic rally, bitcoin exchange deposits outpaced the bitcoin price, with bitcoin and crypto analytics firm Glassnode recording around 200,000 daily exchange deposits.
Bitcoin exchange deposits have previously increased along with the bitcoin price, with deposits falling back during bear markets, however, average bitcoin exchange deposits dropped sharply over the last six months even as the bitcoin price rosesuggesting the last bitcoin rally wasn't driven by retail investors.
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Heres How To Predict Major Moves In The Price Of Bitcoin - Forbes
Bitcoin Just Reversed and Its Vulnerable To A Drop Towards $5,200 – newsBTC
Bitcoin is down more than 5% and it broke the $6,000 support against the US Dollar. BTC price is now showing bearish signs and it could continue to move down.
After a decent upward move, bitcoin struggled to gain momentum above the $6,500 resistance against the US Dollar. BTC price made a couple of attempts to settle above $6,500, but it failed.
As a result, there was a fresh decline below the $6,200 support and the 100 hourly simple moving average. The price gained bearish momentum and traded below the $6,000 support.
A new weekly low is formed near the $5,694 level and bitcoin is currently consolidating losses. It is trading above the 23.6% Fib retracement level of the recent decline from the $6,471 high to $5,694 low.
There are many hurdles on the upside, starting with the $6,000 level. The first major hurdle is near the $6,080 level and the 100 hourly simple moving average. The 50% Fib retracement level of the recent decline from the $6,471 high to $5,694 low is also near $6,080.
More importantly, there is a key contracting triangle forming with support near $5,780 on the hourly chart of the BTC/USD pair. To move into a positive zone, the price must clear the triangle resistance and $6,080.
Bitcoin Price
The next hurdle is near the $6,200 level, above which the bulls are likely to aim a retest of the key $6,500 resistance area in the near term.
If bitcoin fails to recover above the $6,000 and $6,080 resistance levels, it could continue to move down. An initial support is near the $5,800 and $5,780 levels.
A clear break below the triangle support and $5,700 may perhaps spark more downsides. The next support is near the $5,500 level, below which it could continue to move down towards $5,200 in the near term.
Technical indicators:
Hourly MACD The MACD is attempting a change in slope to the bullish zone.
Hourly RSI (Relative Strength Index) The RSI for BTC/USD is currently below the 50 level, with a bearish angle.
Major Support Levels $5,780 followed by $5,500.
Major Resistance Levels $6,000, $6,080 and $6,200.
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Bitcoin Just Reversed and Its Vulnerable To A Drop Towards $5,200 - newsBTC
Did BTC Miners Crash Bitcoin Price With 51 Days Before the Halving? – Cointelegraph
Bitcoin (BTC) price has started to show strength in its recovery since the black Thursday selloff this past week, but is this something we can expect to continue? Or is this a dead cat bounce on the way down to lower lows?
In today's analysis Im looking not only at the charts, but also at the possibility of large Bitcoin miners being the cause of the 50% price drop on March 12, after supporting data emerged last week suggesting that short-term holders sold a whopping 281,000 BTC, which resulted in the crash.
Daily crypto market performance. Source: Coin360.com
In an article published by Coinmetrics on March 17, on-chain data supported the fact that short-term BTC holders were most likely responsible for the selling rather than new holders.
The figures they quoted included 281,000 BTC was on the move after 30 days of holding, compared to 4,131 that hadnt been touched for over a year before being moved.
This data might suggest to some that it was weak hands that FOMO bought in during Bitcoin's 30% price rise at the beginning of 2020. However, one has to consider the possible motives at play for such a large amount of Bitcoin being sold off cheap.
This to me opens up the very real possibility that the same people responsible for Bitcoin's price rise this year, were the same people responsible for its fall.
As can be seen in the chart below, Bitcoin had been trending in a downward parallel channel since June 2019 a trend that seemed to bottom on Jan. 4, 2020, which saw the Bitcoin price take off in a new ascending channel.
This new impetus for Bitcoins price was welcomed, but not questioned. Why did Bitcoin start to rise? Was it the upcoming halving, which is now just 51 days away? Was it the mining difficulty increase? Was it renewed institutional interest? However, what if it was all of these things combined, but with a twist.
There are 1,800 new Bitcoins mined every day, and between the period of Jan. 4 and Mar 12, there would have been 122,400 Bitcoin mined. This is about 50% of the amount that was revived by short term holders, and you dont get more short term than freshly mined BTC.
BTC USD daily chart. Source: TradingView
Im not going to pretend that I know any of this for a fact, this is just a theory with a lot of supporting data.But I will throw a few reasons that would make sense for larger miners to crash the market before continuing with my analysis.
I believe the above to be plausible reasons, especially if you consider how much hashing power comes out of China, a nation that pretty much has a crystal ball when it comes to the Coronavirus outbreak, as the first cases where being reported there back in November 2019.
This almost creates a perfect storm of conditions to execute the black swan event that was able to simultaneously gain dominance in the market, and regain control of the price. After all, if miners have no control over the price, then the halving will have no impact.
BTC USD daily chart Source: TradingView
When you zoom out on the Bitcoin 1-day chart, its almost obvious where miners could have stopped selling. The breakout at the beginning of the year just looks like a bump in the road, as we have since resumed the same downward channel we were in for the entire second half of 2019.
Well never really know whether or not the above scenario is true because of the selloff. However, one thing that is definite is that the price bounced off the support of the descending channel at $4,400 as anticipated in last week's analysis, so I am keeping these levels in mind looking forward to the week ahead.
At present, the price is holding above the middle of the channel, which is around $5,800. However, should this level fail to hold, then I expect $4,200 to be tested next week.
Should $5,800 continue to hold, then $7,200 is the key level of resistance for Bitcoin to push past and flip to support to be rid of this descending channel once and for all.
BTC mining difficulty. Source: BTC.com
Since the beginning of 2020, we have largely had the mining difficulty increase. This, in turn, seemingly saw the price rise, and as such, it seemed like a valid indicator.
However, next week we are set to see the years first double-digit adjustment, and unfortunately, its a negative one of -10.54%.Only time will tell if this will have a negative impact on the price of Bitcoin.
The yearly trend suggests that it might also just be correcting itself after such a dramatic selloff on the day it last increased. Bitcoin has a history of punishing its holders prior to big rewards, and the next chart might help you visualize what could be in store over the coming weeks and months.
BTC Rainbow Chart Source: Blockchain Centre
Similar to the stock to flow ratio chart, only this one I feel helps convey an important message, and that message is Keep buying Bitcoin at these levels.
Whilst this chart isnt intended to be financial advice, and like the S2F model has most likely been based on hindsight, what it does show is potentially how long we might remain in the blue fire sale zone both ahead and beyond the halving.
As a Bitcoin hodler and trader, I take great comfort in one thing shown on this chart. There are many more buying opportunities than there are selling opportunities, so should the price of Bitcoin continue to slide next week, try to view it as an opportunity to buy more, rather than reflecting on how much of a rekt pleb you feel right now.
I said it last week, Ill say it again, the CME gap still exists at $9,165. Whilst it feels almost impossible right now, 90% of CME gaps still fill, so theres always a possibility.
However, being more realistic and looking at the week ahead, if Bitcoin can hold $5,800 as support then all eyes are on $7,200 as the key level to break out from.
From here, I would expect the next level of resistance to be present around $8,000 before we can even start to think about $10,000 again.
We cant completely ignore all the global turmoil right now. Thus, if $5,800 fails to hold, I think its highly probable that we will revisit $4,200.
Falling below $4,200 is not a scenario I believe we need to consider. However, if this were to break, then $2,760 would be the last level of support Id be looking at, as this would represent an 80% retracement from last year's high of $13,800. If it fails to bounce there, then I would completely expect Bitcoin to go to sub $1,000 levels.
The views and opinions expressed here are solely those of @officiallykeith and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
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Did BTC Miners Crash Bitcoin Price With 51 Days Before the Halving? - Cointelegraph