Kategorie: Bitcoin News

Bitcoin news about the Bitcoin (BTC) blockchain and its crypto ecosystem.

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Crypto prices surge via strongest rally in 9 months, but why?


Key Takeaways

  • Bitcoin is back in the 20s, Ethereum has crossed $1,500 and altcoins are powering north in what is the biggest crypto rally in 9 month
  • Optimism that Federal Reserve will pivot off high interest policy sooner than expected, following cooler inflation data
  • Next big day for crypto markets is February 1st, when the Fed will decide on the latest interest rate policy
  • Solana is up 130% since the start of the year, leading the altcoins
  • Even memes are rising, with Dogecoin and Shiba Inu again making moves
  • Some analysts fear the market is premature in pricing in an earlier-than-expected Fed pivot

 

Crypto markets are dishing out a heavy dose of nostalgia to start the year, off to their strongest rally in 9 months.

Bitcoin is trading close to $21,000, Ethereum is at $1,500 and altcoins are powering aggressively upward, too.

I took a snapshot of the market on this day last week, when markets had bounced to start the new year. One week later, the direction is the same – but the rally has been taken up a notch. The below chart presents crypto price returns to start the year, a sea of upward moves:

What is causing prices to rise?

Over the past year, inflation has perhaps replaced pandemic as the dirtiest word in our vocabularies. But it is for good reason, with the globe gripped by an inflation crisis the likes of which we haven’t seen since the 1970s.

But in the last few weeks, just a little bit of optimism that inflation has peaked has seeped into the market. This has led to investors betting that the Federal Reserve will peel away from interest rate rises sooner than previously expected. And the markets are doing something that most people forgot they could – they’ve gone up. 

The market in general has risen. The S&P 500 is up close to 5%. Crypto prices can throw up a 5% candle in a matter of minutes, but the stock market is obviously less volatile, and 5% amounts to a strong move – there were only four occasions throughout what was a very volatile 2022 when the market rose by this much in a week.

Interest rates hold the key for the crypto markets. Altcoins trade like levered bets on Bitcoin, and Bitcoin has been trading like a levered bet on the S&P 500 over the last year or so. Ever since interest rates began to be hiked in April 2022, the Bitcoin price has been freefalling.

While there have been wobbles drawn from the crypto market itself (the LUNA death spiral, Celsius crash and staggering FTX debacle spring to mind), the key variable is undoubtedly tight monetary policy suppressing the value of all risk assets. Bitcoin will not be allowed to rise until the Fed pivots, and this past week has seen investors move towards a stance that expects that pivot earlier than previously.

Will it continue?

The next key date is February 1st, when the Federal Reserve will meet to decide the latest interest rate policy. These FOMC meetings, alongside the monthly CPI report, have been the key drivers in markets over the last year.

I wrote five days ago about how we would get volatility to end the week as we ran into the CPI report. That report came in as anticipated, but reflected another month of falling inflation, which as described earlier propelled markets upward.

Nonetheless, the surge in prices is somewhat surprising when considering the words that have thus far come out of Fed chairman Jerome Powell’s mouth. He has been adamant that a pivot is not coming and has even taken swipes at the market’s perceived premature assumption that monetary policy will be loosened again.

Indeed, there had been plenty of false starts in the market over the last year, with investors repeatedly betting that the Fed was bluffing over the extent and speed that interest rate hikes would be implemented. This is part of the reason that the subsequent move downward has been so fierce.

In truth, the below chart paints the picture better than a thousand words:

Altcoins making greater moves

As we have seen repeatedly throughout crypto history, the higher-beta altcoins are printing gains significantly higher than Bitcoin. Of course, this comes from a lower base – the downside of higher beta is that when times are tough, the pain is that much more severe, and altcoins have certainly experienced that throughout this crypto winter.

The gains have been led by Solana, the Layer 1 that has had a tumultuous year even by crypto standards. I wrote a deep dive on it two weeks ago, but the coin had plummeted from at one point holding the third spot behind Ethereum and Bitcoin to barely hanging on inside the top 20.

A combination of repeated outages, top projects leaving for rival blockchains and a close connection with the disgraced Sam Bankman-Fried all contributed to Solana shaving 97% from its all-time high of $260, trading towards the end of 2022 at $7.70.

But in typical crypto standards, a flip of sentiment led by the outright inexplicable meme coin BONK has helped to boost the coin, which is now trading at $23.40, having more than doubled in the last two weeks.

Meme coins have been enjoying the gains across the board. This would normally be the part where I’d try input some analysis about why, but we know by now that there is no real pattern to the meme coin madness, so instead I will simply list the returns. Shiba Inu is up 29%, while the Daddy of them all, Dogecoin, has added 20% and is now trading at a market cap of $11.2 billion.

What happens next?

For now, investors are enjoying the gains, having simply tried to survive throughout 2022. But in looking at the market, while prices have soared, volatility remains low and volumes are still way off what they were during the pandemic.

The market has been uncharacteristically serene since the FTX implosion, and this is the first real move of any significance. While optimism is obvious, investors remain somewhat cautious and prices are still extremely suppressed from this time last year.

A 75% fall followed by a 20% rally still amounts to a 70% fall. So while the green candles are pretty this morning for traders – and long overdue – the scale of the damage to crypto here is still severe. Institutional adoption has likely been dented harshly by the myriad scandals, there is still the potential for more dominoes to fall in the FTX web of contagion, and macro/inflation remains highly uncertain.

The last two weeks amount to some much-needed positive news not only for crypto, but for the economy as a whole. Investors are celebrating that with surging charts, but these are still uncertain times with many twists and turns ahead.

The post Crypto prices surge via strongest rally in 9 months, but why? appeared first on CoinJournal.

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13% of Bitcoin supply in profit as BTC rallies above $18,200

  • Bitcoin price jumped more than 5% on Thursday to hit levels above $18,400.
  • According to on-chain data from Glassnode, the price rally has helped return 13% more BTC into profit; now 60.5% of circulating supply is in profit.
  • Only 47%-48% of BTC had been in profit between November 2022 and the start of January, 2023.

Bitcoin’s breakout to prices above $18,200 has seen 13% more of circulating supply return into profit, on-chain data from Glassnode says.

Per the platform, the sharp surge in percentage of supply in profit amid the latest crypto rally confirms a buy the dip scenario as prices fell in late 2022. Indeed, the metric suggests a large volume of the benchmark cryptocurrency was acquired at prices between $16,500 and $18,200.

Bitcoin supply in profit jumps amid BTC rally

Bitcoin price hit lows of $15,600 in November 2022 after a violent market reaction to the collapse of cryptocurrency exchange FTX. The price bounced to above $18,000 in mid-December before bulls hit resistance and BTC tumbled to below $17,000.

The supply in profit or supply in loss metric considers the on-chain history of a coin, determining the price at which it last moved. Coins are in profit if the price at which they last moved is lower than the current price of BTC, while the percent in loss is when the current price of BTC is higher than the value of the coins when they last moved on-chain.

According to Glassnode, more than half of Bitcoin circulating supply fell into loss between November and January this year. Approximately 47%-48% of BTC supply was in profit during the period.

However, with 2023 starting positively for cryptocurrencies and BTC’s push to highs of $18,420 on 12 January, the percentage of circulating supply on profit has increased to 60.5%.

As of writing, Bitcoin price is 5.2% up in the past 24 hours and data from CoinGecko shows the flagship cryptocurrency has rallied nearly 9% in the past week.

The post 13% of Bitcoin supply in profit as BTC rallies above $18,200 appeared first on CoinJournal.

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What to expect in crypto ahead of inflation report, as Bitcoin banks eight straight days of gains


Key Takeaways

  • Bitcoin has increased for eight straight days, now up 9.2% on the year
  • Period of low volatility in the crypto markets paired with softer inflation data has sent prices upward
  • Latest CPI report is out Thursday which will trigger volatility and is vitally important for the market following increased optimism over last month or so
  • Altcoins could move violently on the report, while Bitcoin will likely shake off its $18,000 mark if data comes in below or above expectation

 

Bitcoin has banked eight straight days of price rises, as the new year has kicked off assiduously for cryptocurrency investors.

Whereas 2022 brought nothing but pain and freefalling prices, 2023 has thus far been the exact opposite. Bitcoin is up above $18,000 and Ethereum close to $1,400, good for rises of 9.2% and 16.4% respectively year-to-date. Many altcoins are up even more.

Volatility has reduced in the crypto markets

The macro climate is pushing prices upward. I wrote a piece analysing the softer climate last week, but optimism has crept into the market that inflation may have peaked and that the possibility of a pivot from the Federal Reserve off its policy of heightened interest rates may be coming soon than previously anticipated.  

It should be noted that while this is a nice rally, it is hardly a violent breakout. Cryptocurrencies are notoriously volatile and there has actually been an unusual serenity that has washed over markets over the past couple of weeks.

A quick glance at the chart for the daily returns of Ethereum illustrates that there has been a perceptible fall in volatility.

Inflation data to be released Thursday

I write this on Thursday morning, with the all-important US inflation data to be released this afternoon. If we know anything by now, it is that inflation numbers rule the world. If there is anything in the current climate that will produce volatility, it is the CPI report.

As mentioned above, this relief rally has largely been predicated on softer inflation leading to the hope that the Federal Reserve will pivot off its high-interest-rate policy sooner than anticipated. Another positive inflation number would give further impetus to crypto prices. It is not hard to imagine Bitcoin pushing up towards $20,000 and Ethereum to $1,500 if the number comes in cooler than anticipated.

On the flip side, of course, is the potential for the number to disappoint investors. Following two straight months of positive inflation, a step back this afternoon would be a body blow for crypto, and it would not be a surprise to see it drop sharply as all the optimism of the last month gets released in an instant.

The inflation number is expected at 6.5%. This would be a decline from the prior month of 7.1%. Should the number come in at 6.7% or higher, this would represent a major disappointment and crypto will likely freefall. Do not be surprised to see Bitcoin down at $16,500 in this scenario.

The data will be released at 1:30 PM GMT (8:30 AM ET), and it is the last CPI report before the Federal Reserve’s February 1st interest rate decision.

Altcoins showing signs of life

However bad things have been for Bitcoin and Ethereum, the landscape has been a hell of a lot worse for altcoins. Below are the percentage returns in 2022 from the top 10 coins as of 1st January 2022.

As is standard, these coins are significantly more volatile, and trade like leveraged bets on Bitcoin. It follows that this year, the jumps have also been stronger than the number 1 crypto. 

Looking at the top 10 coins from Jan 1st this year, some of the returns have been seismic, albeit from a significantly lower base. Remember, a 90% drop followed by a 50% rise is still the same as an 85% drop from the original starting point. A simple math problem that many investors do not understand. Hence, the past couple of weeks have been positive, but this is still a space that has been absolutely ravaged by the bloodbath that was 2022, and it will take a very long time to recover from. 

Final thoughts

This is a pivotal week for the markets and it will be a true gauge of how far the battle against inflation has come. Central banks have been adamant that inflation is the number one priority, and the consequent interest rate policy has crushed risk assets over the last year.

Things are tough in the markets, but with a third straight month of OK inflation data, it could point toward a light at the end of the tunnel. Then again, the world is teetering on the edge of a recession as it is, and if inflation takes a step back, it will be a double whammy of high rates and still-persistent inflation. As always, risk assets will feel the pain. 

Crypto investors will just have to hope that the pivotal CPI number doesn’t dare tick up beyond 6.5%. 

The post What to expect in crypto ahead of inflation report, as Bitcoin banks eight straight days of gains appeared first on CoinJournal.

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Argo Blockchain mined 28% fewer bitcoins in December

  • Argo Blockchain mined 147 bitcoins in December 2022, down from 198 in November.
  • Mining revenue was $2.49 million, compared to $3.46 million during the previous month.
  • Argo sold its Helios facility to Galaxy Digital for $65 million as it looked to avoid nose-diving into bankruptcy.

Argo Blockchain, a leading Bitcoin miner that endured a terrible run in 2022 and came close to bankruptcy, has announced it mined 147 BTC only in December.

The publicly-traded company’s total mined bitcoins for the month were lower than the 198 BTC mined in November — nearly 28% lower than its mining output in November.

Mining revenue came in at $2.49 million (£2.07 million), down from $3.46 million (£2.94 million) in the previous month.  The firm’s mining margin in December 2022 was 48%, compared to 29% in November.

As of 31 December, the miner held 141 bitcoins.

Argo CEO on reduced mining results

According to details provided in the miner’s operational update published on 11 January, the decline in mining revenue (decreased mined coins) was mainly a result of the reduced mining operations following the winter storm that hit the United States in December.

Argo, like many other Texas Bitcoin miners, contributed to the stability of Texas’ power grid by cutting power usage during the storm.

“While our mining results for December were lower than anticipated, the primary driver was the winter storm which led us to curtail operations at Helios. We made this decision in order to not only reduce power usage on the grid, but also to prioritise the needs of the local community and safety of our Helios employees, Argo CEO Peter Wall said in a statement.

Notably, Argo sold its Helios facility for $65 million to Galaxy Digital and also agreed a $35 million loan as it sought to firm its balance sheet. But despite mining fewer BTC in December, and the sale of the Helios facility, Argo’s total hashrate remains around 2.5 exahashes per second (EH/s).

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Its the calm before the storm in crypto markets


Key Takeaways

  • Crypto volatility has come down and extreme on-chain activity subsided in period of relative calm
  • Several concerning developments around Genesis, Gemini and DCG are still ongoing, however
  • Volatility could also spark up once the US inflation data is revealed this week
  • Period is reminiscent of the low drama environment pre-FTX in October 

 

After a tumultuous rollercoaster following the shocking demise of FTX, a period of notable serenity has descended upon cryptocurrency markets. 

With 2022 being a complete and utter bloodbath, it almost feels suspicious that there is even a couple of weeks of low drama in the digital market space. 

But the metrics show that the last few weeks have been among the quietest of the last couple of years. Given the fear of contagion that transpired out of FTX’s collapse, that is a good thing. 

Fear still elevated in crypto circles

Having said that, there is plenty to be concerned about right now. As Coinbase CEO Brian Armstrong stated yesterday when he announced Coinbase was cutting an additional 20% of its workforce, there are likely “more shoes to drop” and there is “still a lot of market fear” out there. 

Crypto lender Genesis last week laid off 30% of its workforce and is reportedly mulling bankruptcy. Crypto exchange Gemini, founded by the Winklevoss twins, has $900 million of customer assets stuck in limbo with Genesis, its sole lending partner for its Earn product. 

The twins have demanded Barry Silbert, CEOP of Digital Currency Group (DCG), which owns Genesis, to step down, accusing him of defrauding Gemini Earn customers. 

DCG fired back, calling it “another desperate and unconstructive publicity stunt from Cameron Winklevoss to deflect blame”. It also affirmed it was “preserving all legal remedies in response to these malicious, false, and defamatory attacks).  

DCG is also the parent company of the Grayscale Bitcoin Trust, which has seen a massive discount to its net asset value, peaking at 50% in the aftermath of the FTX collapse as investors questioned whether reserves were safe (I wrote about GBTC yesterday).  

Markets stand firm for now

For now, while all these episodes play out, the markets are standing firm. Action has been relatively muted, and in fact there has been a tangible return to normal levels for a lot of on-chain activity that went wacky over recent periods. 

The below snapshot shows the net transfer volume in and out of exchanges. Since the start of the year, the action has been tepid, having spiked to extreme levels in November and December as first FTX collapsed and then the questions spiked about the health of Binance. 

This notion that activity has returned to normal is reinforced when looking a the volatility of Bitcoin. The world’s biggest cryptocurrency has been trading sideways for a while now, and the 30-Day Pearson measure of volatility shows how there was a perceptible drop back down to pre-FTX levels in December. 

Macro climate looking more optimistic

It hasn’t just been a respite from within crypto circles. The broader macro environment is looking at least a bit brighter today than it did last month. Inflation is still rampant, but there have been two consecutive readings below expectation, and there is renewed hope that it may have peaked.

The most recent round of interest rate hikes kicked rates up 50 bps as opposed to 75 bps in the two prior months, and while Fed chair Jerome Powell and other central bank chiefs have affirmed that rates will continue to rise until inflation is conquered, the market has moved cautiously upward after European inflation came in at 9.2%, compared to 10.1% last month.

Next up is the US CPI reading on Thursday, which will – as always – be a vitally important day in markets. Expect volatility in crypto markets as coins stare at the number to try to assess what Jerome Powell may do with regard to interest rate policy.

After all, we know by now that crypto is very much holding the stock market’s hand – apart from when, you know, high-profile executives are revealed to be fraudulent (FTX), or top 10 coins cease to exist (LUNA).

Never a dull moment for long in crypto

Back in late October, Bitcoin was seemingly locked in crab motion around $20,000. With traders getting impatient, I warned how crypto could be one event away from a nasty downward wick. T

Three weeks later, FTX collapsed. I never imagined this would happen, and the timing was coincidental, but the premise of the piece reminds me of how I feel now. It’s amazing how short memories are in markets, but we have been here before.

Crypto won’t stay silent for long, and the asset class is far from out of the woods yet. The aforementioned ongoings around DCG, GBTC, Genesis and Gemini are just a few of the million things that could turn south at any moment.

There is also the story around Binance chief Changpeng Zhao being under investigation for money laundering offences by the SEC, there is Coinbase laying off 20% of its workforce following a 905 drawdown in its share price, and God knows what will come out of testimonies in the Sam Bankman-Fried court proceedings.

And then there is macro, where anything could happen to inflation, the Russian war in Ukraine or myriad other variables. It’s been a quiet couple of weeks but don’t worry – the madness will return soon.

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