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Top 5 cryptocurrencies to watch this week: BTC, ETH, XTZ, KCS, AAVE

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Top 5 cryptocurrencies to watch this week: BTC, ETH, XTZ, KCS, AAVE

After declining for eight successive weeks, the Dow Jones Industrial Average rebounded sharply last week to finish higher by 6.2%. However, Bitcoin (BTC) has not been able to replicate the performance of the United States equities markets and is threatening to paint a red candle for the ninth week in a row.

A positive sign is that Bitcoin whales have been buying the market correction. Glassnode data shows that the number of Bitcoin whale wallets with a balance of 10,000 Bitcoin or more has risen to its highest level since February 2021. The accumulation in the whale wallets suggests that their long-term view for Bitcoin remains bullish.

Crypto market data daily view. Source: Coin360

Blockware Solutions highlighted that the Mayer Multiple metric which compares the 200-day simple moving average with the current price was languishing “near some of the lowest readings on record.” The firm said a few other indicators also suggest that Bitcoin is attempting to form a bottom.

If Bitcoin starts a recovery in the short term, certain altcoins are likely to follow it higher. Let’s study the charts of the top-5 cryptocurrencies that may lead the relief rally.

BTC/USDT

Bitcoin remains stuck inside a tight range between the downtrend line and the support at $28,630. The bears pulled the price below $28,630 on May 26 and May 27 but could not sustain the lower levels. This resulted in a rebound on May 28.

BTC/USDT daily chart. Source: TradingView

The bulls will now try to push the price above the downtrend line and challenge the 20-day exponential moving average ($30,538). If they succeed, the BTC/USDT pair could pick up momentum and the rally could reach the 50-day SMA ($35,181).

The positive divergence on the relative strength index (RSI) suggests that the bearish momentum could be weakening and a rally may be around the corner.

On the other hand, if the price turns down from the overhead resistance, the bears will again try to pull the pair below $28,630. If they manage to do that, the pair will complete a bearish descending triangle pattern, which has a target objective at $24,601.

BTC/USDT 4-hour chart. Source: TradingView

The 20-EMA and the 50-SMA on the 4-hour chart have flattened out and the RSI is just above the midpoint, suggesting a balance between supply and demand.

If bulls drive the price above the downtrend line, the negative descending triangle pattern will be negated. That could result in a short squeeze as the short-term bears may close their positions. That could clear the path for a possible rally to the 200-SMA.

Conversely, the bears will come out on top if the price turns down and plummets below $28,630. That could result in a retest of the crucial support at $26,700.

ETH/USDT

Ethereum (ETH) has been in a downtrend but the bulls are attempting to stall the decline at the crucial support of $1,700. The price rebounded off this support on May 28 and the bulls are attempting to build on the recovery on May 29.

ETH/USDT daily chart. Source: TradingView

The RSI is forming a bullish divergence, indicating that the downtrend may be weakening. If bulls push the price above the 20-day EMA ($2,036), the ETH/USDT pair could rise to the overhead resistance at $2,159. The bears are expected to defend this level aggressively. If the price turns down from this resistance, the pair may remain range-bound between $2,159 and $1,700 for a few days.

On the other hand, if the price turns down from the current level or the 20-day EMA, the bears will again attempt to sink the pair below $1,700. If they succeed, the pair may resume its downtrend with the next major support at $1,300.

ETH/USDT 4-hour chart. Source: TradingView

The bounce off the $1,700 support has reached the 20-EMA where the bears may mount a strong defense. If the price turns down from this level, it could enhance the prospects of a break below $1,700. If that happens, the downtrend may resume.

Conversely, if bulls push the price above the 20-EMA, the pair may rise to the 50-SMA. This level may again act as a resistance but if bulls clear this hurdle, the pair could rally to the psychological resistance at $2,000.

XTZ/USDT

Tezos (XTZ) is consolidating in a downtrend. Although bulls pushed the price above the 20-day EMA ($2) on May 24, they could not sustain the recovery. The price dipped back below the 20-day EMA on May 26.

XTZ/USDT daily chart. Source: TradingView

The 20-day EMA is flattening out and the RSI is above 46, suggesting that the selling pressure is reducing. If bulls push the price above the 20-day EMA, the XTZ/USDT pair could rally toward the 50-day SMA ($2.45). If this resistance also gives way, the buyers will attempt to push the price above the uptrend line.

In contrast, if the price turns down from the current level, it will suggest that bears continue to defend the 20-day EMA. The sellers will then attempt to sink the pair below $1.75 which could open the doors for a fall to $1.64.

XTZ/USDT 4-hour chart. Source: TradingView

The 4-hour chart shows the recovery turned down from the 200-SMA but the pair bounced off the uptrend line. The bulls have pushed the price above the 50-SMA and will now attempt to clear the overhead hurdle at the 200-SMA. If they manage to do that, it will suggest the start of a short-term up-move.

Alternatively, if the price turns down from the current level or the 200-SMA, the pair may drop to the uptrend line. A break and close below this support could pull the price down to $1.61.

Related: Bitcoin to set a new record 9-week losing streak with BTC price down 22% in May

KCS/USDT

KuCoin Token (KCS) broke above the 20-day EMA ($15.61) on May 20 but the bulls could not push the price above the 50-day SMA ($17.19). This may have tempted short-term traders to book profits, which pulled the price back below the 20-day EMA on May 26.

KCS/USDT daily chart. Source: TradingView

The bears could not build upon their advantage and sustain the price below the 20-day EMA, indicating strong buying by the bulls at lower levels. The buyers have pushed the price back above the 20-day EMA on May 29.

If bulls sustain the price above the 20-day EMA, the possibility of a break above the 50-day SMA increases. If that happens, the KCS/USDT pair may rally to $18.44 and later to the 200-day SMA ($19.63).

Contrary to this assumption, if the price turns down from the current level, it will suggest that traders are selling on rallies. A break and close below $14.92 could open the doors for a further decline to $12.90.

KCS/USDT 4-hour chart. Source: TradingView

The pair has been facing stiff resistance at the 200-SMA but the shallow correction indicates that bulls are buying on minor dips. If bulls push the price above the 200-SMA, the next stop could be $17.14. A break and close above this level could start the next leg of the up-move.

Conversely, if the price turns down from the overhead resistance, the bears may pull the pair down to the 38.2% Fibonacci retracement level at $14.20 and then to the 50% retracement level at $13.30. This zone is likely to act as a strong support.

AAVE/USDT

AAVE rallied to the 20-day EMA ($101) on May 23 but the bulls could not push the price above it. This suggests that bears continue to defend the level aggressively but a minor positive is that the buyers have not given up much ground.

AAVE/USDT daily chart. Source: TradingView

If the price turns up and breaks above the 20-day EMA, it will indicate the start of a stronger relief rally. The AAVE/USDT pair could then rally to the 50-day SMA ($132) where the bears may again mount a strong defense.

Alternatively, if the price turns down from the current level or the 20-day EMA and breaks below $89, the short-term bulls who may have purchased at lower levels could close their positions. That could pull the price down to $79 and later to $64.

AAVE/USDT 4-hour chart. Source: TradingView

The 4-hour chart shows that the pair has been oscillating between $90 and $110 for some time. The 20-EMA and the 50-SMA are flattish and the RSI is just above the midpoint, suggesting a balance between supply and demand.

This equilibrium could tilt in favor of buyers if they push and sustain the price above $110. If they do that, the pair could rally toward $130 and then $143. Conversely, if the price plummets below $90, the bears will gain the upper hand. The pair could then decline to $80 and later to $70.

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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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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