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Bitcoin price recovers $31.5K, but traders say ‘scam’ price action will bring more downside

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Bitcoin price recovers $31.5K, but traders say ‘scam’ price action will bring more downside

BTC price rallied back to a strong resistance level at $31,500, but traders caution that another whipsaw is the most likely outcome.

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Bitcoin price recovers .5K, but traders say ‘scam’ price action will bring more downside

Bitcoin’s (BTC) short-term price action has been dominated by whipsaws that trigger around the $31,000 to $32,000 level and the June 6 reversal at this point triggered a quick sell-off that pushed the price down to $29,200.

Surprisingly, on June 7, the price rapidly reversed course as Bitcoin rallied back to $31,500, but given the current rejection at this level, traders are likely to proceed cautiously, rather than expect a quick surge to $35,000.

BTC/USDT 1-day chart. Source: TradingView

Here’s what several analysts are saying about the short-term outlook for BTC and what support levels to keep an eye on moving forward.

A clear redistribution range

The range-bound trading currently impacting Bitcoin was addressed by crypto analyst and pseudonymous Twitter user il Capo of Crypto, who posted the following chart highlighting the “clean range” that BTC has been stuck in for nearly a month.

BTC/USD 4-hour chart. Source: Twitter

The analyst said,

“What is happening inside the range and what has happened at the range high, shows that this is [a] clear redistribution range. Clean break of the range low = last leg down confirmed = 21K–23K.”

Ongoing flip-flop price action

A slightly different outcome to the current market chop was suggested by crypto trader and pseudonymous Twitter user Phoenix, who posted the following chart lamenting the month-long range-bound trading for BTC and hinted that it will see more of the same.

BTC/USD 2-hour chart. Source: Twitter

Phoenix said,

“On our way towards a whole month inside a mini-range again to fully deploy the flip-flop-your-bias-non-stop-angry-pleb-and-gtfo. *Ppl fomoed the top, lows taken again after the nuke, up we go again?*”

Related: Coinbase balance drops by 30K BTC as Bitcoin price nurses 6% losses

A possible flush out to $20K

For traders trying to get some sense of where the bottom might be, market analyst and pseudonymous Twitter user Rekt Capital posted the following chart highlighting the 200-EMA (exponential moving average) as a key indicator to watch.

BTC/USD 1-week chart. Source: Twitter

According to Rekt Capital, the price history for Bitcoin shows that while it “tends to confirm uptrends when it breaks above the blue 50-week EMA,” on the flip side it “tends to confirm maximum financial opportunity when it reaches and breaks down from the black 200-week EMA.”

A closer look at the recent price action around these indicators was provided in the following chart posted by Rekt Capital to provide a better picture of what support level to look out for.

BTC/USD 1-week chart. Source: Twitter

Rekt Capital said,

“This area is ~confluent with the orange #BTC 200-week MA. In fact, $BTC would need to downside wick below the 200MA to reach the ~$20K area. Interestingly, downside wicking tends to occur below the 200MA to mark out generational bottoms.”

The overall cryptocurrency market cap now stands at $1.24 trillion and Bitcoin’s dominance rate is 46.4%.

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.

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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.

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