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Long-term Bitcoin [BTC] resumes accumulation but the short-term view remains grim

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After a massive bloodbath in May, Bitcoin and the cryptocurrency market entered a less volatile phase. However, its poor streak is not over yet. The world’s flagship crypto-asset went on a fresh decline following the development of the US Department of Justice [DOJ] recovering a chunk of hacked funds in the Colonial Pipeline hack. These funds in question were reportedly denominated in BTC.

Despite the ongoing rout in the market, there are participants who were currently accumulating Bitcoins. According to the latest weekly report by the blockchain intelligence company, Glassnode, a historically important cohort of holders have resumed accumulation

Bitcoin Long-term Hodlers are back

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The supply held by Long-term holders [LTHs] was observed to have accelerated upwards. According to Glassnode, the limit for LTH status is those unspent transaction outputs [UTXOs] that have remained inactive for 155-days.

The LTH camp had previously distributed their coins when the Bitcoin market soared from just $10k all the way to its ATH above $64k. However, there has been a change in this trend. After the cryptocurrency went on a downward spiral, the net change in the supply of long-term holders switched upward demonstrating what it calls a “HODLing behavior”.

What does this mean?

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This fractal closely resembled the late 2017 bull and early 2018 bear which, according to the report, describes the “inflection point “where this camp of holders stop spending, resume accumulation, and therefore holding. Can this be a sign that these are cheap coins and won’t get any cheaper in the near future? While this did not paint any bullish picture for the short-term market participants who were hit the hardest by the downturn of events, it did indicate a long-term bullish sentiment.

Let’s talk numbers. Currently, the long-term holders hold 10.9 million BTC which accounts for almost 60% of Bitcoin’s total circulating supply. It is also important to note that this category of holders today own 2.3 million more BTC as opposed to the coins owned by them at the peak of the 2017 rally. Commenting on this behavior, Glassnode concluded,

“This does highlight an intuitive reality; higher coin prices require larger capital inflows to sustain bull market trends. It also shows that the distribution of fewer coins can put in local/macro market tops if the capital inflow demand is not there.”

Where Is Bitcoin Headed After Unwinding Weekend Gains?

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Bitcoin slumped all the way close to $53K in a damaging turn before making a return to the press time price of $55,267. With this, the flagship crypto-asset toned down its losses while the market-wide volatility was ubiquitous.

Weak institutional demand was one of the major contributing factors for the devastating losses. Bitcoin’s fall in Monday was prompted by the weak buying demand from institutions as it established an ATH. During this time, investors were reportedly inclined towards profit-taking rather than accumulation.

It was a result of the flat-to-negative Coinbase premium, which is a major indicator for weakening institutional demand. Nevertheless, the token recovered but failed to cling to psychological support levels.

The Quick Flip: Support-Turned-Resistance-Turned-Support

Besides, the cryptocurrency breached strong support around this $55K area as part of the extended loss briefly before flipping over it within hours. This essentially confirmed that both on-chain and trading volume took a dramatic turn of events but the said level continued to form crucial support for Bitcoin’s price.

Let’s look at some of the key metrics that could reveal Bitcoin’s price action in the days to come.

Growing Participants in Bitcoin ecosystem

Investors have reacted positively to the elevated prices in the market as the number of participants in the network continued to follow an upward trajectory. This was revealed by the blockchain intelligence firm, Glassnode which tweeted,

“The number of new participants in the #BTC network is unprecedented. Over the past weeks, we have seen a large growth of new entities. This is a strong indication that new retail investors have been entering the space.”

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Survey Estimates 10% of Stimulus Checks Could Be Channeled To Buy Bitcoin and Stocks

The US President, Joe Biden signed a $1.9 trillion stimulus package into law last week. This made many Americans eligible for $1,400 checks. This brought about inflation and weakening USD fears, which could help the cryptocurrency’s price to go up.

In yet another interesting development, Mizuho Securities’ study estimated that 10% of the roughly $400 billion in funds given directly to the country’s residents could be used to purchase Bitcoin and stocks. After surveying 235 people with a household income under $150,000, the platform found that nearly 40% of them said that they would invest the direct payments into BTC and stocks while 61% asserted that they would choose Bitcoin over equities.

Hence, this provides a hopeful picture for Bitcoin even in the fact of the latest slump.

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Bitcoin: Strong Wall Of Support Forms At $47.1K

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Bitcoin’s surge above $54k was not accompanied by volatility this time. Rather the transition from the consolidation has been smooth as it noted weekly gains of more than 10%.

The price has been resilient so far. Notably, the on-chain support level at $47,173 is now touted as the largest since Bitcoin was trading $11k. This was noted by the blockchain intelligence platform, Glassnode’s latest weekly report.

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According to Glassnode’s UTXO Realized Price Distribution, nearly 6.5% of Bitcoin’s circulating supply or 1.2 BTC shifted on-chain while the support level has actually strengthened to rest above $47.17k level. This demonstrated “one of the largest on-chain BTC accumulation levels” ever.

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The reports stated,

“We can see sustained and significant volume has transacted between $45.5k and $48.9k. This range now represents one of the largest on-chain BTC accumulation levels in history, certainly, the largest since the last cycle’s $20k ATH was breached.”

It is important to understand that at times of the movment of a large volume of coins on-chain and when an on-chain support level gains foothold, it indicates that there is significant accumulation interest.

Also, the buyers now perceive this level as a ‘value’ entry point.

But what would happen if the price tumbles near $40K lows? Even as on-chain support has been gaining strength since last week in an unlikely event of a bearish reversal in price, this level could form an equally strong point of resistance.

Bitcoin In Exchanges Declines Uninterrupted

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The HODling game has been strong as evidenced by the amount of Bitcoin being held on exchanges has taken a hit. If the latest stats are to be believed, approximately 20% over the last 12 months have been moved from these platforms.

The decline in the amount of BTC held on exchanges could signify that more market participants were buying the coin but storing it offline. This could, in turn, contribute to a potential supply crunch which could significantly push the price of Bitcoin in the future.

Bitcoin Price Plunges $1,500 in Three Minutes to Liquidate $100M from BitMEX

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In just over 12 hours after Bitcoin price broke past the $10,000 resistance level for the first time in over 20 days, the digital currency came down in despair and heartbreak for many. Before the price came down, Bitcoin saw a barricade of sell orders that dropped the crypto’s price to as low as $8,600 on major exchange BitMEX. 

Bitcoin Price plunge

However, the price of BTC on spot exchanges and some of the other derivative exchange platforms, managed to sustain the lows of $9,000. Unfortunately, on the BitMEX exchange platform the price came tumbling down by over $1,500 in a bearish rally that ended up liquidating quite a number of market participants.

According to data by cryptocurrency derivatives platform Skew.com, roughly $96 million in long positions were erased by the plunge. However, this is slightly lower than the previous $125 million BTC liquidation yesterday when Bitcoin’s price action wiped out $10,000, which signals that the market was leaning long before moving.

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Bitcoin price next move?

Cryptocurrency and market analysts are yet to react to the next destination after the plunge, but what is clear is that Bitcoin price is below the crucial resistance of $10,500 in the meantime. Bitcoin’s price action has attempted to break past the $10,500 on two crucial occasions but the efforts have ended up futile.

The first attempt was when Chinese president Xi Jinping publicly endorsed blockchain technology, and the other time was during February’s surge to $10,500. Due to this fact of several unsuccessful attempts to mount past this price level, it strongly signals that the crypto is braced for a down trend.

Bitcoin Price Breaks above $10,000 as it Prepares for the Next Bull Run

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The demand for the most popular cryptocurrency has pushed Bitcoin price past the critical $10,000 price level. If this price turns out to be a support, then the price of Bitcoin could be heading towards $12,500.

Bitcoin’s price is back to bullish once again as it breaks past the critical $10,000 resistance. If BTC price history can repeat itself, then the price of the largest cryptocurrency by market cap is braced for a surge towards the $12,500.

Bitcoin’s price action breaking out

Since the cryptocurrency market crash on March 12, BTC’s price action has been restricted to the mounting side-by-side channel. Every time BTC’s price action hits the top boundary of this channel, it plummets back to the bottom of the boundary and vice versa.

Nevertheless, the bulls seem to have stepped into the bottom line after the most recent rally. In the meantime, one would expect Bitcoin to progress more to the center or the top of the boundary channel.

 

Bitcoin Price

According to Into The Block’s “In/Out of the Money Around Price” (IOMAP) model, positive momentum to the uppermost part of the channel is imminent.  Based on this on-chain metric, there are not any substantial barricades that would block positive momentum above the current price levels.

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On the other side, IOMAP researchers suggest that there are adequate supply walls to suck up any sliding pressure.  In particular, the one in between $9,270 and $9,580, where approximately 1.6 million addresses are holding more than 1.2 million BTC bought at the mentioned price tags.

Fear and Greed Index

Furthermore, the latest price surge has sent investors into ‘Greed’ according to data by the Fear and Greed Index. This significant indicator examines the general public sentiment based on the price and social media data and combining it into a single figure.

For the first time since early May, the Fear and Greed Index indicated 56 (Greed) when the price of Bitcoin was nearly the same levels. Greed is basically not a good signal for BTC though. “Be fearful when others are greedy and greedy when others are fearful.”

Bitcoin Trading Volume Dwindling as Investors Become Nervous

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The price of Bitcoin is currently in consolidation within the lower $9,000 price level. This is the region where the cryptocurrency has been trading for the last day, as both the buyers and sellers reach a stalemate, pushing down the Bitcoin trading volume.

This consolidation has triggered a reduction in Bitcoin trading volume, which has been soaring high over a multiple week time frame. Additionally, it seems that the investors have become nervous as it’s getting increasingly unclear where the world’s largest cryptocurrency will go next, up or down?

Bitcoin trading volume declines as the crypto commences consolidation stage

Last week, Bitcoin suffered vast volatility that was triggered by the transfer of 50 BTCs from an account that has been dormant for over a decade. This price volatility happened when Bitcoin’s price was about $9,800, triggering a sharp decline to $8,800 lows. At this point, the buyers upped their game to regain the $9,000 price levels.

Notably, Bitcoin has formed a string of lower highs over the past couple of weeks, as it saw a number of harsh rejections at about $10,000, distracting its momentum. Its current dull price action has already made investors nervous and fearful, resulting in a decline in the Bitcoin trading volume.

Bitcoin traders have become fearful

A recent study carried out by Arcane Research concluded that BTC’s trading volume is diminishing after hitting this year’s high last week. The decline has conflicted with the occurrence of last week’s vast volatility, which seems to symbolize a shift of sentiment in the industry.

https://alternative.me/crypto/fear-and-greed-index/

According to the study’s report, Bitcoin’s stalling price action has got the investors nervous. Per the Fear and Greed Index, market participants have become more fearful as Bitcoin fails to break past $10,000. If Bitcoin carries on with its price struggles in the coming days, investors will get even more worried and fearful.

Billions Mentioned Bitcoin in Latest Episode of TV Drama Series

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In a bid to push Bitcoin into the mainstream, Billions mentioned Bitcoin yet again in another episode of the American hit TV drama series. Last week, American writer Ben Mezrich teased the crypto community on Twitter by revealing Bitcoin will get a mention in the following episode of the popular TV show.

Bitcoin is the largest cryptocurrency by market capitalization. Basically, Bitcoin is a decentralized digital currency that runs through blockchain, meaning Bitcoin has no central administrator. Besides, Bitcoin can be sent from user to user via the P2P Bitcoin Network without need for third parties.

Billions mentioned Bitcoin twice in a month

The third episode of season five of the hit series is staged around the cut-throat hedge fund billionaire Axelrod’s son, Gordie, getting dismissed from school for running an illicit Bitcoin mining farm using the school’s power grid. As a result of his illicit mining operation, the school’s power grid crashes and Gordie gets expelled by the principal. 

Some part of the cryptocurrency community criticized the Bitcoin Billionaires author for his alleged pessimistic depiction of Bitcoin. However, Ben responded by warning the critics that he is creating ‘baby steps’ towards mainstream adoption. 

Earlier in the month, Billions mentioned Bitcoin in the premiere of season five. In reality, Bitcoin mining among students is not a fiction. Back in 2018, Stanford University students were cautioned against using the institution’s power grid for individual financial gains. 

TV shows driving Bitcoin adoption 

The world’s most popular cryptocurrency has found its way into several TV shows recently. The Good Wife was reportedly the first TV show to mention Bitcoin back in 2012,followed by popular TV animation show The Simpsons in 2013. The Family Guy and Silicon Valley in 2014 are. also among the notable shows to positively feature Bitcoin.

There are several other TV shows that can be added to the list but the above mentioned are the notable ones. Furthermore, the majority of the shows treated Bitcoin like a joke as others such as Silicon Valley tried to enlighten the world on its intrinsic value.

7% of Bitcoin Supply Exit Exchanges as the Average BTC Deposits Size Increased

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March 2020 highlighted a turbulent time in the crypto-asset universe and Bitcoin is still incorporating several changes that took place following the flash crash on 12th March.

As BTC’s price plummeted below $4000, a recent glassnode study suggested that the number of Bitcoin flowing out of the exchanges has increased and over the month, BTC balance on various platforms was collectively down by 7 percent.

Bitcoin’s net flows incline towards exchange outflow

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The chart in the discussion illustrated that Bitcoin’s net transfer volume from/to exchanges in terms of BTC suffered a major drop after the fall. Although BTC’s value has exhibited stability over the past few days, the new flow of Bitcoin into exchanges remained significantly low in comparison to the past 6 months.

Such a difference can be explained as the report stated,

“The volume of BTC flowing into exchanges spiked significantly when the price crashed, but has since declined. Exchange outflow also experienced a spike, but its subsequent decline has been smaller than that of inflow.”

Hence, exchange outflows were moving at a faster rate than inflows, succumbing to a reduction of 7 percent in terms of BTC balance for the crypto exchanges.

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The number of BTC has fallen from 2.41 million in January to levels below 2.25 million tokens in exchanges, at press time.

Average size of BTC deposit may have increased

The report indicated that even though exchange inflows were at a state of decline right now, they continued to remain at relatively high levels when compared to the long-term historical period.

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However, there was a stark difference between the number of deposits to exchanges in comparison to the volume of the deposits to the platforms.

The above discrepancy can be explained by the fact that the average size of BTC deposits may have increased during the price crash.

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The chart indicated that the size of exchange deposits in the past have always varied under and around 1 BTC. A difference in range was recently observed when the mean value of exchange deposits spiked up to over 5 BTC, and it continued to hover around the higher range until the past week.

The report said,

“This disparity in the mean size of deposits vs. withdrawals, along with the disparity in the absolute amounts of deposits vs. withdrawals, explains why the net flow of BTC to exchanges is negative.”

It can be speculated that the reduction of BTC on exchanges end could be positive since it would reduce BTC liquidity and restrict the available supply.

 

Bitcoin USD Market Cap May Eclipse $1 Trillion by 2044

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The Internet was a major technical innovation in the 1990s that caught the attention of the majority of Generation X (born between 1965 and 1980).

Now, the era of bitcoin and digital assets is slowly unfolding in space, and both the Millennials and Gen X are getting used to seeing the technology-based financial systems as they become uncertain about the existing central banks.

Cerulli Associates, A world-wide asset management organization recently stated that over the next couple of decades, an estimated 68 trillion USD is going to shift hands, and it will be acquired by Generation X and the Millennials. Amidst, one of the greatest wealth transfer, it is only a matter of how much capital will come into Bitcoin.

According to a recent report released by Kraken, it was indicated that Generation X and the Millennials were the most apt-group of people to embrace the development and adoption of Bitcoin amidst issues like negative interest rate policies and the declining value of USD.

The report stated that the flow of capital into Bitcoin would depend on three key things,

  1. The rate for the adoption of innovative technology.
  2. The rate of inheritance of wealth.
  3. Expected average wealth allocation to Bitcoin.

Over the years, the rate of adoption for various innovative technologies have become faster, as market saturation for internet, cellphone and smartphone usage took less than 24 years. Bitcoin was heading towards a similar direction and combining the fact that the internet was a household essential and BTC’s accelerating growth, Bitcoin’s market saturation could take place faster than expected.

Quantifying the Numbers

Bitcoin currently manifested the nature of an S-curve which basically meant that its growth sustained with respect to time as very high.

The report assumed a time frame of 25 years for Bitcoin to approach critical mass between the Millennial and Gen X. On a minimum allocation of 5 percent of their assets/inherited in Bitcoin, it was believed that by 2044 the annual capital inflows will be around 1 trillion USD. The report stated,

“Assuming a 5% peak allocation by 2044 and a 2% inheritance tax rate, we expect just under 1 trillion USD of wealth to flow into Bitcoin over the next several decades.”

Bitcoin

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However, it can also be analyzed from the above table, considering only 1% of the total inherited wealth flows into Bitcoin, and 5 percent in USD tax is levied, a whopping $188 billion will still be absorbed by BTC, doubling its current market cap.

Lastly, the report suggested that the figure could higher than $1 trillion since the data above only considers the US market’s wealth into the statistics. On a global scale, the wealth transfer could be much higher, as Bitcoin continues to take a step towards wider adoption in the financial industry.

At press time, Bitcoin was valued at $6300 after hiking close 350 USD in the past 12-hours.

Bitcoin Price Needs To Be Higher Than $7000 For Miners To Have a Profitable Post Halving

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It has only been 3 months into 2020 and Bitcoin has already witnessed a turbulent time in the digital asset space. However, a major event which is yet to commence in 2020 is the Bitcoin halving.

Bitcoin halving is one of the mechanisms in the BTC code, which is irreversible and inevitable. Bitcoin’s anonymous developer, Satoshi Nakamoto included a slash in supply in order to cope up with inflation and over the past two halvings in 2012 and 2016, miners have managed to remain profitable after the reduction of block rewards.

However, the global financial market is currently undergoing a tumultuous meltdown amidst the impact of COVID-19, and Bitcoin’s current valuation was raising serious concerns for the miners.

Miners Profitability after Bitcoin Halving

Gate.io recent’s research on the Influences of Bitcoin halving indicated that historically, a halving event has triggered a price rise after a few months post halving and the hash rate has improved as well.

The major concern was Bitcoin has never experienced a halving amidst a global financial crisis. Although popularly deemed as an uncorrelated asset, BTC’s increased correlation with S&P 500 rang bearish alarms across the industry, raising questions about Bitcoin’s valuation post halving.

In light of the scenario, a study was conducted to understand the price range of BTC above which miners will remain profitable posting halving.

The report explained that when BTC price drops below the cost or overall maintenance of a mining rig, it can no longer make profits from the block rewards.

The term used by the research is ‘shut-down price’ for miners which are self-explanatory with regards to Bitcoin’s value.

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Analyzing the above charts and mining rigs available in the market, it can be identified that Bitcoin has to consolidate at least above $7234 post halving for miners to be profitable. The AntminerS19 Pro indicated the least shut-down price, but that particular rig is yet to be available in the market.

If we run an average shut-down price on all the 25 mining rigs, the average shut down price for Bitcoin came up to a whopping $25,385.

Additionally, the report stated that the possibility of miners switching their mining rigs would increase since they would need to be cost-effective in order to incur profit from BTC mining.