Kategorie: Bitcoin News

• Bitcoin has steadied above $16,000

• Okcoin CEO expects Bitcoin’s bear market to be driven by key developments

• The cryptocurrency could come under pressure after falling below moving averages

No Santa Claus rally for Bitcoin (BTC/USD) lovers? This is the clearest sign as the BTC price crashed below the moving averages. Despite bulls successfully defending $16,000, Bitcoin is far away from a bullish market. However, the CEO of the crypto exchange Okcoin is throwing insights on what to look at for a bullish Bitcoin movement.

Hong Fang opines that the need for strong monetary systems would drive Bitcoin and crypto. According to the Okcoin CEO, the failures and shortcomings of the existing centralised currency systems could spur bullish markets. Already, a few countries are testing their monetary systems with Bitcoin and crypto. The notable ones in this pack are El Salvador and the Central African Republic. Will more countries join? Fang thinks so.

The second event is the Bitcoin halving event in 2024. Fang wonders whether it is coincidental that past halving events have been associated with bullish crypto markets. In this regard, he expects the next cycle to be associated with a bullish market for Bitcoin. 

Then there is the final and third bullish trigger – use cases. The CEO says a lot of projects continue to be created in crypto in a bear market. He expects the projects being created right now to be the next trigger of the bull cycle. 

From Okcoin CEO’s thoughts, it is clear that he refers to the BTC’s long-term focus. However, a technical outlook paints a different picture of the short term. 

BTC price outlook and analysis

BTC/USD Chart by TradingView

A technical outlook shows Bitcoin struggling after a slight descent. The moving averages are providing resistance to the BTC price. The RSI remains below the midpoint.

Is BTC set to touch lower prices?

Bitcoin lacks a directional movement. $16,000 is the price to watch, although the cryptocurrency has stabilised at this level. On the bullish side, $19,000 is the price ceiling. A recovery above could welcome further gains.

Where to buy BTC

eToro

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OKX

OKX is a top cryptocurrency exchange which offers over 140 cryptocurrencies to invest in. OKX takes customer security very seriously, they store almost all of their clients‘ funds in cold storage, and the exchange is yet to be hacked. On top of this, the exchange offers very low fees and customers can even use their crypto as collateral for loans on the platform.

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The post Bitcoin struggles but Okcoin CEO thinks 3 catalysts will make it bullish appeared first on CoinJournal.

Key Takeaways

• Bitcoin was the best performing asset class between 2011 and 2021, but the year 2022 has brought nothing but pain
• After rising 14X from its pandemic low in March 2020 to its all-time high in November 2021 of $68,739, Bitcoin has struggled amid risk-off environment
• Pullback has been so severe that majority of the supply is in loss-making position

What a ride it has been for Bitcoin. 

But as we close the chapter that is 2022, the party has turned into a nightmare for most. Literally, most. Because the majority of the Bitcoin supply, which as I write this is 19.24 million bitcoins, is in a loss-making position. 

I have written before about this trend, and as the chart above shows, we have seen greater than 50% of the supply in a loss-making position before. But after a respite, the market has again careened downward after a certain Mr Bankman-Fried was exposed. 

But it is quite the sobering statistic when considering that in the decade between 2011 and 2021, Bitcoin was the best performing asset class in the world. Exploding from fractions of a penny to near $69,000 last year, it made a lot of people very, very rich. 

But for anybody who bought in during the pandemic, the story is likely very different. In extending out the above graph back over the course of the decade, the ups and downs are evident.

Macro environment unprecedented for Bitcoin

The one thing that is glaring is that for the first time in Bitcoin’s history, it is now experiencing a bear market in the wider economy. 

Launched in 2009, Bitcoin had, until 2022, enjoyed one of the longest and most explosive bull markets in financial history. Risk assets across the board went sky-high, with the S&P 500 printing a 7X return from its low point amid the Great Financial Crash to its level at the start of 2022. 

“The scandals and idiosyncratic risk in the cryptocurrency space have been many this year. Nonetheless, despite the torrid happenings in the crypto industry which have undoubtedly made things a lot worse, Bitcoin has plummeted due to the wider macro environment, which has made a mockery of any thought that Bitcoin is not a high-risk asset”, said Max Coupland, director of CoinJournal, when assessing Bitcoin’s 2022 price action.

On this note, when plotting Bitcoin’s price level against the S&P 500, all looks healthy. Only thing is, I cut the chart off at the start of 2022. 

The below chart then does the same – plots the S&P 500 against Bitcoin. Only this time, it focuses on 2022, showing that both the stock market and Bitcoin have plunged. 

“Bitcoin is uncorrelated” narrative killed

Of course, the narrative that Bitcoin is uncorrelated is completely dead. Not only that, but the misguided thinking that led some to conclude that Bitcoin is an inflation hedge has been proven foolish. 

There is no other way to put it – Bitcoin has traded like a high risk asset. 

In fact, it has traded like such a high risk asset that not only was it the best performing asset of the decade between 2011 and 2021, when markets surged up and all these risk assets printed meteoric gains, but now that we are experiencing the flipside, it has performed worse than nearly anything. 

It has pulled back so severely that those gains which saw it claim that best performing asset title are now not enough to prevent the fact that most of the supply is held by investors in loss making positions. 

If you use our data, then we would appreciate a link back to https://coinjournal.net. Crediting our work with a link helps us to keep providing you with data analysis research.

Research  Methodology

• On-chain data sourced via Glassnode

• S&P 500 and Bitcoin price data sourced via Yahoo Finance

• Bitcoin the “best performing asset class of 2011-2021” sourced via Yahoo Finance

The post Most of the Bitcoin supply is now loss-making appeared first on CoinJournal.

Key Takeaways

• Core Scientific was worth over $4 billion last summer, but is down 985 form all-time highs
• Rising electricity costs are hiking costs with falling Bitcoin prices hurting revenue
• With hash rate near all-time highs, the entire mining industry is struggling

The crypto winter continues to take victims. The latest to succumb to Chapter 11 bankruptcy is Bitcoin miner Core Scientific.

Bitcoin’s plummeting price has quelled revenues significantly and, while cashflow is still positive, the revenue is not enough to cover operational costs. The goal is for the company to restructure under the Chapter 11 process rather than entirely liquidate.

Core Scientific has been struggling all year, in line with miners across the industry as they get squeezed on both ends – falling revenue in the form of Bitcoin prices and rising costs as a result of surging electricity costs across the globe.

The stock was trading at a market cap north of $4 billion last summer, but has now fallen 98% from all-time highs, its current market cap $70 million.

The share price did triple in short order last week when financial services company B. Riley offered to provide the company with $72 million in non-cash financing. The stock has since given up some of those gains.

Mining industry struggling

Across the entire industry, miners are finding it tough. Electricity costs and the Bitcoin price are the two most vital inputs for the bottom line of a bitcoin miner, and both have moved significantly against them this year.

So too has the hash rate, with it straddling near all-time highs for a lot of the year. A higher hash rate means more computing power is demanded to verify transactions on the Bitcoin blockchain. While a higher hash rate is thus seen as a positive because it increases the security of the network – it would cost more energy and time to take over the network – it also weighs on miners’ profit margins.

When the hash rate hit another all-time high of 250 TH/s in early October, blockchain analytics company Glassnode warned that “miners are somewhat on the cusp of acute income stress”. This latest story about Core Scientific proves that.

Looking at miner reserves, the number of bitcoins held by the large mining pools has also been steadily decreasing this year.

Mining stocks are a  levered bet on Bitcoin

It’s a poignant reminder that with these mining companies’ revenue denominated in Bitcoin, they are obviously extremely volatile stocks. Unfortunately, this year has brought the perfect storm giving rise to not only falling Bitcoin prices, but rising costs in the form of electricity, meaning miners have been hit twice as hard.

Looking at share prices, many companies have fallen further than the price of Bitcoin, which as I write this is trading at $16,800, down 64% on the year. Many mining companies are seeing losses that dwarf that in 2022.

They’ll hope that 2023 will bring better fortunes. But for Core Scientific, the road head is murkier. Now embroiled in the Chapter 11 process, it will hope to restructure and weather the storm, but there is no getting around the fact that the market for miners is likely to remain torrid in the short to medium term, at least.

The post Why are Bitcoin miners struggling so much? Core Scientific file for bankruptcy appeared first on CoinJournal.