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Bitcoin bounces to $30.7K as analyst presents Stock-to-Flow BTC price model rehash

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Bitcoin bounces to $30.7K as analyst presents Stock-to-Flow BTC price model rehash

Bitcoin (BTC) climbed to fresh local highs overnight into June 3 after United States equities cut losses.

BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView

Wall Street provides short-term relief

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD gaining steadily to hit $30,670 on Bitstamp before consolidating.

The mood among stocks was more solid during the June 2 session, with the S&P 500 reclaiming the majority of its lost ground over the past month. The Nasdaq Composite Index ended up 2.7%.

Analyzing the crypto market cap compared to the Nasdaq, popular analyst TechDev noted what could be an incoming inflection point.

Potentially interesting. #BTC / $NDQ pic.twitter.com/i0k8oEyhw3

— TechDev (@TechDev_52) June 2, 2022

Fellow trader and analyst Pentoshi meanwhile issued a sobering outlook for the S&P 500 on weekly timeframes going forward.

My current working theory for #SPX and markets in general is this. I had talked about 3840 in the past being a key spot

I believe we just had our swing low and that the next weekly will look like the red part drawn on the chart w/ a higher low than last week and thus risk on ST https://t.co/o7uv2b40BF pic.twitter.com/TOOn6KP9Th

— Pentoshi (@Pentosh1) May 22, 2022

Bitcoin itself continued to face calls for a retracement, which would eclipse May’s $23,800 lows.

Crypto Tony still targeted between $22,000 and $24,000, demanding a break of a trendline currently near $32,500 to consider long scalping.

“Bitcoin held the $30K level, so long would still be intact from the $29.3K region,” Cointelegraph contributor Michaël van de Poppe meanwhile added on his short-term strategy.

“Now flipping $30.3K would be continuation towards $31.8K possible.”

At the time of writing, BTC/USD lay at around $30,500.

Timmer: Bitcoin supply and demand needs “fresh take”

Zooming out, one on-chain analyst became the latest to take on the increasingly controversial Stock-to-Flow (S2F) BTC price model.

Related: This classic Bitcoin metric is flashing buy for first time since March 2020

Having failed to validate its $100,000 end-of-year prediction in 2021, Stock-to-Flow has become increasingly sidelined as its creator, PlanB, fields criticism.

While acknowledging the model’s potential shortcomings, Jurrien Timmer, head of global macro at on-chain analytics firm Glassnode, revisited it, offering a tweak which he argued would serve to increase its utility.

“It’s time for a fresh take on Bitcoin’s supply/demand dynamics,” a dedicated Twitter thread began.

Timmer proposed taking into account Bitcoin’s supply curve to produce a more conservative trajectory for price growth. The result, he considered, had retroactively already captured BTC price action more accurately than the raw S2F predictions.

The close-up below shows that this more modest supply model has been (in hindsight) more accurate than the original S2F’s projections for this halving cycle. /15 pic.twitter.com/65WgS4Hody

— Jurrien Timmer (@TimmerFidelity) June 2, 2022

“If accurate, It suggests still robust but less pie-in-the-sky upside than before. Maybe even several years of sideways, in line with the halving cycle, and likely continued volatility,” he continued.

PlanB had noted that the May monthly close had been Bitcoin’s lowest since December 2020.

As Cointelegraph reported, the next block subsidy halving event is increasingly figuring as a line in the sand for a return to bullish strength.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

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Bitcoin Miner Sell-Offs Could Keep Prices Low, Says JP Morgan

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Bitcoin Miner Sell-Offs Could Keep Prices Low, Says JP Morgan

Strategists at JPMorgan Chase & Co. believe the current Bitcoin sell-off by miners could make it difficult for the price of the asset to bounce back, especially if the trend continues.

In a note released yesterday, they pointed out that publicly listed Bitcoin miners account for 20% of all reported Bitcoin sales in May and June. It’s likely that private miners are also selling at the same rate or even higher, given that they have limited access to the capital markets.

The massive sell-off is a sharp turn in the strategy that has mostly been about holding block rewards until the market conditions get better. But the drop in Bitcoin prices and its effect on miners’ profitability means many are now struggling to meet operating costs.

According to the strategists,

Offloading of Bitcoins by miners, in order to meet ongoing costs or to deliver, could continue into Q3 if their profitability fails to improve.

Already, it has likely “weighed on prices in May and June, though there is a risk that this pressure could continue.”

However, JP Morgan strategists point out that it’s not all gloomy. One silver lining is a drop in the cost of mining Bitcoin from around $18k – $20k earlier in the year to $15k this month. This is due to the drop in hash rate and mining difficulty over the past two weeks.

Meanwhile, the cost of production varies based on the size of the miner. According to Arcane Crypto, large miners spend around $8,000 to produce one Bitcoin. Meanwhile, Securitize Capital says the cost of production might be over $20k for some miners after adding overhead costs and interest rates.

Bitcoin Price 69% Away From ATH

Bitcoin price has declined by more than half compared to its value at the beginning of the year. It’s also down 69% from its all-time high as it hovers around the low 20k range in the last few weeks.

Several factors have pushed the crypto markets over the edge, including the crash of Terra’s ecosystem and the near-insolvency of crypto firms such as Celsius and 3AC. But the Fed hike in interest rates has been the primary factor behind the drop.

Almost every other niche in the space, like non-fungible tokens and decentralized finance, has reported losses too. With most miners also having debt obligations, selling their Bitcoin stash appears as the best course of action to stay afloat.

Disclaimer

All the information contained on our website is published in good faith and for general information purposes only. Any action the reader takes upon the information found on our website is strictly at their own risk.

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Bitcoin Energy Consumption Declines as Miners Grapple With Falling Revenue

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Bitcoin Energy Consumption Declines as Miners Grapple With Falling Revenue

Bitcoin mining is no longer consuming as much energy as before, according to a Cambridge Bitcoin Electricity Consumption Index report, which shows a 25% decline in energy use since the start of the month.

Per the index, the current energy consumption of Bitcoin is 10.65 gigawatts, significantly lower than the 14.34-gigawatt on June 6. This means its annualized consumption is at 93.33 terawatt-hours, putting it below countries like Argentina and Norway in energy consumption.

At its peak, the BTC network needed 16.09 GW of power. The drop in the consumption from its record high of 150 terawatt-hours in May is likely due to the drop in mining hash rate. 

Bitcoin hash rate is the computing power needed to create a block on the Bitcoin network and has dropped to 199.225 exahash per second (EH/s) over the last two weeks. This came after the mining difficulty reached a record high of 231.428 EH/s on June 13. It has now dropped by almost 14% since then.

The index estimates the energy consumption by using a profitability threshold using “different types of mining equipment as the starting point.” 

With Bitcoin prices nosediving to below $20,000 this month, some miners have also gone offline as mining proved less profitable. This explains the consecutive drop in the consumption and hash rate.

Miners are Selling Their Bitcoin Holdings

Additionally, the drop in the price of Bitcoin has left several miners in a lurch as they struggle to sustain their operations. A recent report by Arcane research shows that publicly traded Bitcoin miners sold all the coins they mined in May.

This is usually against the strategy of most miners, which is to hold their Bitcoin for better market conditions. But with profitability nosediving and many miners struggling to generate a positive cash flow, they are selling their holdings. 

According to the report, many miners sold their Bitcoin to cover operational expenses and pay off debts. One of such is Bitfarms which decided to sell 3000 Bitcoin for $63 million to improve corporate liquidity.

Energy consumption of Bitcoin mining has been one of the major criticisms of the network and cryptocurrency industry. But recent research by Michel Khazzaka reveals that the traditional banking sector uses 56% more energy.

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Coinbase to Offer Nano Bitcoin Futures Contracts via Third Party Brokerages

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Coinbase to Offer Nano Bitcoin Futures Contracts via Third Party Brokerages

Coinbase will list a derivatives product called the nano futures contract on Monday.

This will be the first product listed on the Coinbase Derivatives Exchange, offering investors the opportunity to buy a contract linked to the price of one-hundredth of a bitcoin. Customers can purchase the Nano futures contract through third-party brokerages. Customers will not be able to buy the nano futures contract from Coinbase directly until the exchange receives a license to operate as a futures commission merchant. The exchange first applied for the license on Sept. 16, 2021.

U.S. customers have a healthy appetite for crypto derivatives

Coinbase floated the idea of bringing derivatives to its U.S. customer base after purchasing derivatives exchange FairX in January this year.

Americans have long been trading derivative products on foreign exchanges, sinking their teeth into high-leverage products that U.S. exchanges have lacked, indicted by the volume of crypto derivative trades in December 2021 surpassing that of spot trading. Binance alone recorded $52.5 billion in derivative trade volume during the 24 hours ending Friday afternoon, compared to $12.7 billion in spot products. Coinbase enjoyed $1.7 million in spot trading during the same period.

It’s worth bearing in mind that the new nano futures contract will not offer leverage-type bets that drive volume on exchanges like Binance.

Challenges Coinbase faces

A report by Barron’s suggests that it would take a long time for derivatives products to generate significant income for the company.

The new Coinbase product will enter a market of established crypto derivative products, while the company battles cash flow problems.

In March, the CME Group announced micro futures contracts linked to one-tenth of the price of bitcoin and Ethereum.

To add pressure, Moody’s Investors Services recently reduced Coinbase’s guaranteed senior unsecured notes from Ba2 to Ba1, relegating its corporate debt to “junk” status, with the potential for future downgrades. Ba ratings are assigned by Moody’s to credit obligations containing speculative components, considered to be a serious credit risk. Moody’s cited Coinbase’s reduced revenue and cash flow due to the current crypto market downturn as reasons for the downgrade. Coinbase’s recent employee layoff did not count in its favor, with the rating agency still seeing threats to the company’s profitability.

Dan Dolev, a senior analyst at Mizuho, believes that the new product does not address the central issue of competitors offering zero trading fees, which would severely affect revenue if Coinbase were to compete.

Coinbase’s shares fell precipitously on May 3, 2022, from $130.15 to $62.71 at market close on Friday.

What do you think about this subject? Write to us and tell us!

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