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Bitcoin (BTC) Color Charts Indicate Neutral Sentiment

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Bitcoin (BTC) Color Charts Indicate Neutral Sentiment

While the price of Bitcoin (BTC) has been hovering around $50,000 for several weeks, cryptocurrency analysts are trying to determine where the market is at in the cycle. In recent days, several colored charts of Bitcoin have been published on Twitter, with some interesting indicators superimposed on the price of the largest cryptocurrency.

BeInCrypto looks at several indicators for which Bitcoin’s colored charts may shed more light on the current state of the cryptocurrency market. These include the Fear and Greed Index, the funding rate of perpetual futures and the change in position of long-term BTC holders. It turns out that they all give moderate readings and generally indicate a neutral sentiment in the market, which is waiting for the next big move in the Bitcoin price.

Fear and Greed Index still in fear territory

The Fear and Greed Index for Bitcoin has been below 50 (blue line) since November 22. Moreover, it has even been below 30 (red line) for most of the recent period, indicating a strong fear and apprehension of further declines in the BTC price.

Source: alternative.me

The recent breakout of Bitcoin price above the falling resistance line and reclaiming of the $50,000 area on December 23 sent the index up near 40. However, yesterday’s drop of more than 6% has brought fear back into the market, with the Fear and Greed Index showing 27 today.

Cryptocurrency analyst @dilutionproof tweeted a chart of BTC going back to 2018, in which the colors correspond to the Fear and Greed Index readings. The resulting color chart of Bitcoin shows at which moments of price action the sentiment of market participants was maximally greedy, neutral or experiencing maximum fear.

Source: Twitter

It turns out that the Fear and Greed Index works quite well as a proxy for local peaks (maximum greed, red) and local lows (maximum fear, blue). Comparing current with historical readings, we see that the market today is in a rather neutral position that leans slightly towards fear.

This in turn means that there is a higher probability for an upward move. However, due to the lack of extremes, there is still a chance for the decline to continue and reach maximum fear.

Funding rate slightly positive

The funding rate of perpetual futures contracts is another interesting indicator of market health. When it is positive, holders of long positions periodically pay a small amount to holders of short positions. Conversely, when the rate is negative, short positions periodically pay long positions.

In other words, a positive funding rate for futures contracts signals that most market participants expect the price to rise. Therefore, they are willing to pay to maintain their long position. With a negative rate, most market participants expect declines to continue.

Over the last month, the funding rate has been slightly positive, staying in the 0.004-0.009% range for most of the time. This is a very small positive value, which mostly indicates a completely neutral sentiment of the BTC market.

Chart by Glassnode

We can also see that during the last few days, the funding rate was close to 0. On the other hand, on December 3-4, it fell to negative values with a bottom at -0.009%. It is interesting to note that the Bitcoin price decline continued after December 4, but the funding rate did not return to negative values.

On-chain analyst @DylanLeClair_ tweeted another colored chart of Bitcoin, where the price has been colored according to the value of the funding rate. The long-term perspective, which he calls a “fantastic view,” shows that a negative funding rate has very often been the determinant of a bottom in the BTC price (red).

Source: Twitter

At the same time, very high positive readings, reaching the vicinity of 0.1%, were signals for local tops. Today’s funding rate values are neutral, despite the fact that the price is still correcting. Again, this can be interpreted as a moderate bullish signal, which however still leaves some room for further decline.

Long-term hodlers await

Finally, the last color chart of Bitcoin uses an on-chain indicator that analyses the behavior of long-term hodlers (LTH). Historical analysis shows that periods of LTH accumulation have coincided with declines and consolidation in the Bitcoin price. In contrast, strong increases in the BTC price were combined with strong distribution and sales of LTH to short-term market participants.

Cryptocurrency market analyst @samjrule tweeted yet another color chart of Bitcoin, in which he used the LTH behavior indicator. Specifically, he overlaid the 30-day change in LTH supply on Bitcoin price over the past two years.

Source: Twitter

When the chart colour was turning dark red, LTHs were experiencing a strong distribution. On the contrary, when it was turning dark blue, LTHs were going through a wave of strong accumulation.

Today, we see that despite Bitcoin’s falling price, LTHs are not accumulating aggressively. Moreover, they are not selling off their supply either. Their net position change indicator is in slightly negative territory (light orange).

This means that the sentiment of long-term hodlers is cautious. They are slightly reducing their exposure to BTC and not buying more coins. However, their behaviour is far from aggressive selling, so the overall sentiment remains neutral. LTHs are patiently waiting for the next big move in the Bitcoin price.

For BeInCrypto’s latest Bitcoin (BTC) analysis, click here.

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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GamingShiba Becomes CoinMarketCap’s Most Trending Token

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GamingShiba Becomes CoinMarketCap’s Most Trending Token

Streaming, NFT, and metaverse project GamingShiba (GAMINGSHIBA) overtook bitcoin on Wednesday to secure CoinMarketCap’s most trending token. 

The meme coin’s top trending status comes in the same week that Shiba Inu (SHIB) announced its own metaverse project, creating a potential point of confusion for investors seeking to FOMO in. Despite strong similarities in appearance and name, GamingShiba has no relation to Shiba Inu.

GamingShiba is a microcap meme coin, which according to their website holds aspirations to create, ‘a binding bridge between Gamers, Streaming platforms, NFTs and Metaverse’. In a request for further information, GamingShiba says they will “only reveal how they will create this bridge once the project has reached 100,000 holders.”

A tweet on Wednesday declared that the project currently has over 45,000+ unique addresses so investors may have a little time to wait for further information. 

GamingShiba topped the CoinMarketCap trending charts on Wednesday (Source)

The streaming/gaming/NFT/Metaverse project also describes itself as ‘your virtual dog’ and offers the following food for thought on its homepage:

“The modern technology and contemporary ambient that the internet created can not be imagined to function as a whole without cryptocurrency. The impact that the cryptocurrency has on a global scale is astronomical in the sense of being the generator of almost every development and especially the latest one.”

Comparing Shiba Inu and GamingShiba


This seems very familiar

Besides strong similarities in both appearance and name, the development of Shiba Inu’s own metaverse has created fresh point of overlap between the two Shiba-themed projects.

On Monday Shiba Inu teased the launch of the Shiberse in 2022, which the company hails as ‘An immersive experience for our ecosystem’. The Shiba Inu team promises further details at a later date.

In December of 2021 it was revealed that Shiba Inu has a multiplayer collectible card game in the works with development outsourced to the Australian gaming company PlaySide Studios. The final game is expected to be delivered in Q1 2023. 

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Gold, Stocks, and Bitcoin: Weekly Overview — January 27

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Gold, Stocks, and Bitcoin: Weekly Overview — January 27

This week’s overview of price movements for Bitcoin (BTC), gold, and our stock pick Google-parent Alphabet Inc.

BTC

The price of Bitcoin (BTC) in January has gone from bad to worse. Already having dropped coming into the new year, BTC was trading around $44,000 on January 13.

Over the next few days it traded down to $43,000 before reaching $42,000 by January 20. However, after a brief spike, BTC proceeded to plummet into the following days, hitting as low as $34,000 on January 22, and $33,000 on January 24. Buying pressure then returned pushing it back up to $37,000, and as high as $38,000 by January 26.

It is currently trading below $37,000.

According to Caxton market intelligence head Michael Brown, Bitcoin’s recent decline reflects the “institutionalization” of crypto assets, in the sense that they are increasingly traded like other risky assets.

“Unsurprisingly, given that the ‘easy money’ party is now coming to an end, it is the most risky assets — crypto – that are bearing the brunt of the market’s ire,” he said. “With the Fed likely to ramp up the hawkish commentary in upcoming remarks, further downside looks likely.”

GOLD

While gold had a good past week, it has since dropped below last week’s lows. On January 13, the price of gold was roughly $1,824. Over the next few days it traded down to $1,812 by January 19, when it suddenly spiked up to $1,840. Hitting $1,848 on January 20, gold traded down a bit before pushing back up to $1,852 by January 25.

However, by the next day, the price of gold plummeted and is now trading around $1,796.

Gold prices extended losses to a more than one-week low, while the U.S. dollar and Treasury yields rallied, following U.S. Federal Reserve Chairman Jerome Powell signaling an interest rate hike in March. That sent U.S. Benchmark 10-year yields close to one-week highs while the dollar rose to its strongest in over a month.

“The reaction was normal in the sense that Chairman Powell stressed the strength of the economy and the determination to fight inflation,” said Commerzbank commodities analyst Carsten Fritsch.

GOOG

Alphabet has had a pretty dismal start to the new year. Starting out 2022 at around $2,900, Alphabet started falling by January 5 and reached roughly $2,740 by January 7. After gapping down the next trading day GOOG proceeded to push up the next two days, eventually gapping up to $2,850 by January 12. That momentum had reversed the next day, with GOOG gapping down to $2,740 by January 18, then continuing falling, gapping down again to $2,550 by January 24.

Since then however, GOOG has recovered a bit, and is currently trading around $2,640.

Earlier this week, YouTube announced it was considering adding non-fungible tokens (NFTs) to its features for creators this year, according to a letter from the CEO. The letter marks the first time ​​YouTube’s owner, Alphabet Inc.’s Google, has announced integration with the cryptocurrency collectibles.

“We’re always focused on expanding the YouTube ecosystem to help creators capitalize on emerging technologies, including things like NFTs, while continuing to strengthen and enhance the experiences creators and fans have on YouTube,” Chief Executive Officer Susan Wojcicki wrote in her annual letter to creators.

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House members urge US Treasury Secretary to clarify definition of broker in infrastructure law

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House members urge US Treasury Secretary to clarify definition of broker in infrastructure law

“We must ensure requirements imposed on the digital asset ecosystem are both crafted and implemented in such a way to ensure the United States remains at the forefront of financial innovation,” said the letter to Janet Yellen.

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House members urge US Treasury Secretary to clarify definition of broker in infrastructure law

A bipartisan group of members from the U.S. House of Representatives called on Treasury Secretary Janet Yellen to clarify the language in the infrastructure bill signed into law in November around the definition of “broker.”

In a Wednesday letter, House Financial Services Committee ranking member Patrick McHenry and ten other representatives urged Yellen to reference the Keep Innovation in America Act to “ensure that any future guidance” in the November infrastructure bill would provide “the necessary clarity to the digital asset ecosystem.” In addition to the reporting requirements, the lawmakers said that the Treasury Department should narrow the scope of the information a broker can capture, as it would risk “the creation of an unlevel playing field for transactions in digital assets and those required to provide them.”

— Financial Services GOP (@FinancialCmte) January 27, 2022

According to the House members, the current wording of the law would potentially allow the Treasury to interpret which companies and individuals in the crypto space qualify as a “broker,” creating a burden of reporting information to the government they may not necessarily have. This would seemingly require miners, software developers, transaction validators and node operators to report most digital asset transactions worth more than $10,000 to the Internal Revenue Service.

“As nascent financial technologies develop, we must ensure requirements imposed on the digital asset ecosystem are both crafted and implemented in such a way to ensure the United States remains at the forefront of financial innovation,” said the letter to Yellen. “We believe consistent information reporting on digital asset transactions is necessary. However, it should not prevent these technologies and the ecosystem from continuing to flourish due to unclear regulations that only create uncertainty.”

Related: US Congressman calls for ‘broad, bipartisan consensus’ on important issues of digital asset policy

The appeal to the U.S. Treasury Secretary mirrors that of an December letter from six senators claiming the infrastructure law contains an “overly-broad interpretation” of what a broker is and requesting Yellen provide guidance to correct the perceived error. Senators Rob Portman, Cynthia Lummis, Mike Crapo, Pat Toomey, Mark Warner and Kyrsten Sinema urged Yellen to provide a set of rules clarifying the wording “in an expeditious manner.” Lummis and Senator Ron Wyden also attempted to pass legislation that would have changed the tax reporting requirements to “not apply to individuals developing blockchain technology and wallets” on Nov. 15 when the bill was signed into law by President Biden.

To date, none of the proposed measures clarifying the wording in the law have gotten enough support to enact change. Many lawmakers and crypto advocacy groups have expressed concerns that if the law is implemented as is, it could threaten the United States’ position as a nation encouraging the development of innovative technology.

“Our innovators and entrepreneurs can’t wait,” said McHenry. “Secretary Yellen must provide much-needed clarity so this nascent industry can flourish here in the U.S.”

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