Kategorie: Bitcoin News

Celsius, a renowned crypto lender, has obtained crucial approval to go ahead with its plan of building a Bitcoin mining plant as it tries to find ways of returning it back to financial stability.

The value of Celsius assets decreased from $22.1 billion to $4.3 billion between March 30 and July 14, this year, with approx. $1 billion in third-party liquidations.

Celsius was brought down by the collapse of Terra LUNA and it has since been struggling to remain afloat something that forced it to file for Chapter 11 Bankruptcy in the US to as it tried to restructure. Prior to filing for Chapter 11, Celsius had tried a number of measures including ETH tokens from Bancor to settle its DAI loan with Aave so that it could free the WBTC it had provided as collateral. Celsius had borrowed 100 million DAI tokens on Aave forcing Marker DAI to disable DAI supply to Aave to avoid more exposure to Celsius.

The plan to build a Bitcoin mining facility is part of Celsius’ plans of stabilizing the company following its current financial crisis.

However, Celsius was recently sued for supposedly using customer deposits to rig the price of CEL tokens while failing to properly hedge risks. Therefore, the new venture of building a BTC mining plant will be widely watched seeing that Celsius is yet to resume withdrawals.

Investing $3.7M for the new Bitcoin mining plant

Celsius intends to invest a whopping $3.7 million in constructing the new Bitcoin mining facility and an extra $1.5 million in importing mining equipment and paying for customs.

Celsius already has a mining plant in the US that presently operates over 43,000 mining rigs. By adding a new mining facility, Celsius intends to increase the number of mining rigs that it shall be operating to 112,000 by the second quarter of 2023.

The increased mining operations will in return increase the number of bitcoins that Celsius will have something the company believes will be a source of finances.

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Bitcoin (BTC) appears to have slightly recovered after one of its worst crashes in 2022. The coin had fallen below $30,000 for the first time since July last year. However, it rebounded sharply in a few days. Here are the main takeaways:

• BTC is currently hovering above $31,000 after a slight recovery over the last 24 hours

• However, there still remains a significant downside risk that could push BTC below $30,000

• Bullish RSI divergence however suggests a Bitcoin surge towards $34,000 could happen

Data Source: Tradingview 

Bitcoin (BTC) – How the price may playout

Bitcoin (BTC) fell below $30,000 for the first time in almost 10 months. Although the coin had seen sharper falls in 2022, it had never breached $30,000. The mega-cap however recovered almost instantly and is now hovering above $31,000. 

Despite this, a lot of downside risk still remains. In fact, there are fears that slow investor sentiment and an ongoing broader correction in the market could crash BTC to $20,000 before any future bull run. But momentum indicators show that there is an opportunity for short-term gains.

We expect BTC to test $34,000 based on the current RSI divergence. However, upward momentum remains severely limited. Unless something drastic happens to change sentiment, BTC will likely sell off after hitting $34,000 and may as well lose the $30,000 support once more.

Where will BTC bottom?

A lot of analysts were expecting some correction in Bitcoin this year. However, the price has fallen sharply than expected. If BTC is not able to stay above $30,000, we are going to see a huge drop in the price. 

In fact, downside risks below $30,000 are so serious to a point where BTC could go into free fall once it firmly settles below $30,000. Most analysts fear the coin could bottom at $20,000 before its next run.

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The crypto market has witnessed a massive price meltdown over the crypto winter, with the total market cap of all cryptocurrencies shrinking by a whopping $2 trillion.

Most assets have seen their prices slashed from bull market peaks – see Bitcoin struggle to stay above $20,000 after dropping from highs above $69,000, or Ethereum bulls battling to keep $1,000 after testing $4,800 in November.

The market recoiled loudly as cryptocurrency Terra (LUNA) and the algorithmic stablecoin TerraUSD (UST) collapsed, wiping billions of dollars’ worth of investors’ money off the face of the Earth.

Crypto meltdown’s main culprit

While investors saw UST’s march to zero and a market cycle wreak havoc on prices, the main culprit is the over-leveraging that characterized the bull market environment in 2020 and 2021.

Nik Bhatia, the founder of The Bitcoin Layer, told CNBC in an interview that the market going into a tailspin could also be traced to the macro environment that had aggressive interest rates from central banks and the end of easy money amid inflation.

But Bhatia, an adjunct professor of finance at University of Southern California (USC), says the shockwaves that hit investors and crypto companies amid the severe bear market is more down to leverage and perhaps the presence of some “bad actors” within crypto than these other factors.

The implosion linked to Terra and Three Arrows Capital aside, the analyst says there were “Ponzi-type” tendencies that characterized the activities of crypto lenders like Celsius.

“…they were attracting depositors with high yields just so they could pay down the yield they had promised their existing investors,” he noted.

He says Celsius’ collapse was due to the broader “misallocation of capital within DeFi,” with investors bent on securing high yields without knowing exactly where the huge interests came from.

The Bitcoin Layer founder added that the blind allocation of capital is what led to the tailspin. If investors did this without leverage, then the impact would be on their portfolios. 

However, going into it at staggeringly high leveraged positions only means the domino would be even more destructive.

You can watch Nik Bhatia’s interview with CNBC here.

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Bitcoin price slipped below $20,000 on Wednesday after headline US inflation data showed the consumer price index (CPI) came in hotter than expected.

Data by the US Labor Department showed CPI rose 9.1% year-over-year for the hottest move since 1981 and 1.3% month-on-month in June, the fastest since 2005. 

The data came in hotter than the estimated 1.1% month-on-month and 8.8% year-over-year, continuing the hot streak that has aligned with the unprecedented rise in the cost of living.

Bitcoin falls below $20,000

US stock futures fell sharply after the inflation report, with the S&P 500 futures dipping more than 1.5% and Nasdaq futures sliding by 1.9%. The Dow futures also fell, and were down more than 300 points, or -1% ahead of market open.

The reaction on Wall Street was also seen across the crypto market. As stock futures plunged, the top cryptocurrency Bitcoin dipped below the psychologically important level of $20,000.

The volatility pushed BTC/USD to lows of $18,892 on crypto exchange Coinbase. At the time of writing, Bitcoin price was down 4.8% in the past 24 hours, according to data on CoinGecko.

BTC/USD price fell below $19,000 on Coinbase. Source: TradingView

The rest of the crypto market was also seeing fresh downside pressure, with Ethereum down 4.8% near $1,000 and BNB, XRP, Cardano and Solana also nursing fresh losses of 3.7%, 2.5%, 6% and 5.7% respectively.

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The cryptocurrency market has had a positive start to the week, adding more than 2% to its value in the last 24 hours.

The cryptocurrency market ended the previous week with a win and is starting this new week with positive performances. The total cryptocurrency market currently stands at around $920 billion, up by more than 2% in the last 24 hours.

Bitcoin, the world’s leading cryptocurrency by market cap, has underperformed over the past 24 hours. BTC is down by less than 1% since the start of the day and continues to trade above the $20k level.

Despite its current poor performance, BTC has maintained its price above the $20k psychological level.

Bitcoin could attempt to surge higher over the coming hours but this could depend on the performance of the broader cryptocurrency market.

Key levels to watch

The BTC/USD 4-hour chart remains neutral as Bitcoin has been underperforming over the past 24 hours. The technical indicators show that Bitcoin is erasing some of its earlier gains.

The MACD line is around the neutral zone, indicating that neither the bulls nor the bears are currently in charge. The 14-day relative strength index of 40 shows that Bitcoin could move closer to the oversold region.

If the bears continue to be in control, BTC could drop below the $20k support level over the next few hours. In the event of an extended bearish performance, BTC could drop below the $19,643 support level.

However, if the bulls regain control, Bitcoin could retest the $21k resistance level in the coming hours. The second major resistance level at $21,983 should limit further upward movement in the short term. 

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