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Bitcoin Mining In China To Usher Historic Moment, Will BTC Be Affected?
Sino Global Capital has been posting reports on Bitcoin, China, and the changes that are taking place within the Asian Giant. Today, most of the BTC miners in the Chinese province of Sichuan will turn off their machines. This has created another variable in the already uncertain crypto market.
At 0:00 on June 20, the mining farms in this province will be powered off. This territory host one of the largest Bitcoin mining operations in the world, 8BTCnews claimed. Thus, some miners expect a dark age for this sector to begin.
8BTCnews claims that the effect of this crackdown has started to ripple across the BTC mining sector. The top ten Bitcoin mining pools by hashrate, AntPool, Poolin, Binance, Huobi Pool, and others, record important losses in their computing power. These losses go from 16%, 21%, 25%, and even as high as 31.19% in the last day.
Historic moment: Sichuan mining farms will all be closed in the early morning of June 20, and Chinese miners may usher in the darkest moment#Bitcoin #bitcoinmining
— 8BTCnews (@btcinchina) June 19, 2021
Overall, the Bitcoin network has an average computing power of 129.52 EH/s. Almost a 30% dropped from its all-time high. This has been reflected on BTC’s Mempool and its transaction cost, at the time of writing, sits at some of its lowest levels in 2021 with 19 sat/vB ($0.96) for a high priority transaction. The minimum fee is the elusive 1 sat/vB.
Bitcoin Mining Outlook, Complete Darkness?
Sino Global Capital presents an objective view of a situation that could be interpreted as only bearish for Bitcoin. The investment firm claims that although part of the BTC mining operations is shutting down, some will remain.
Moreover, a portion of the miners with large side operations was already leaving the country, the medium and small-sized seem more likely to stay. The miners on the move expected a crackdown since March 2021. Thus, they made the necessary preparations.
As more crypto mining bans came in May from Beijing, Qinghai, Inner Mongolia & Sichuan, with the stated goal of achieving financial stability, Chinese miners accelerated their process of migration to other countries.
Sino Global Capital believes China is tackling sectors that jeopardize national economic stability, Bitcoin mining, and crypto trading with leverage. The country could also be targeting activities that enable corruption at a state level.
Miners have adopted 3 measures: they began selling their equipment, stay and see how regulations play out, migrate. The investment firm expects the distribution of the miners on the move to vary.
The overseas migration destinations of Chinese miners are diverse, evenly distributed among North America, Central Asia, Russia, Northern Europe and North Africa. This is actually positive and greatly increases the decentralisation of the bitcoin network.
Nic Carter, a partner at Castle Island Ventures, agrees that the migration of BTC’s hashrate out of China will bring more decentralization to the network. Additionally, Carter believes BTC mining activities could be moved to places where they will operate with 100% renewable energy.
Either way, MSM narratives will likely ignore climate and decentralization benefit of hashrate migration and focus on perceived “risk” to bitcoin or “loss of fundamentals” while ignoring the astonishing reality of bitcoin migrating 50% of its industrial base w/o difficulty
— nicolás carretero (@nic__carter) June 19, 2021
At the time of writing, BTC trades at $35,562 with sideways movement in the daily chart. In the 7-day and 30-day charts, BTC has 4.4% losses, respectively.
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EarnX Is Changing the Game with NFTs
It’s not often that NFT platforms come into the picture that offers the value of tangible utility that can be put to use quickly. Enter EarnX, a subsidiary of Yearn Classic Finance that is looking at NFTs in an entirely new way. EarnX is taking RFID technology and intertwining blockchain tech to revolutionize NFTs. They have launched the EarnX NFT Gallery, and are working to stock up the gallery with a community-driven approach.
RFID integration will allow for physical products to be integrated with NFTs throughout the gallery. Since EarnX is a community-based token, there is the integration of the community’s ability to vote for products, and engage with auctions.
The EarnX Token
One major benefit of the EarnX token is that it’s deflationary – allowing you to earn more as your tokens sit. The token carries voting rights, influencing and impacting which products and artists join EarnX, and emphasizes scarcity, stability, and utility.
In order to combat price manipulation, the token also has a 10% tax on all transactions. 5% goes towards a liquidity pool, locked for four years. The other 5% goes back as a weighted distribution to token holders and the burn address. Built on BSC, EarnX also carries low gas fees and continuous burning, allowing for price stability and use-case advantages, while still incentivizing long-term holders to continue to hold. The protocol’s liquidity is especially secure, courtesy of a partnership with DxSale.
The team has also published a forward-looking roadmap, with a big focus on NFTs looking towards the months to come. In another announcement this week, the EarnX team shared that NFAXE will be a Q3 project; NFAXE is a physical axe and paired NFT that are sent to the NFT’s winning bidder. Another project, NFCarpet, has been shared by Earn’s team as well.
Fresh Off The News
EarnX is hot off the press with a partnership announcement with Bella Protocol earlier this month as well. The partnership looks to explore three primary buckets: providing premium NFTs backed by physical art within the sphere of DeFi, community collaboration, and exploring innovation around NFT mining, dynamic NFTs, and NFT airdrops. In a statement regarding the partnership, EarnX co-founder Marcus King also noted that there will be a “dedicated Bella Protocol physical NFT collection” in the future.
The EarnX token also was added as a supported token on Bitrue to kick off the month. Bitrue users can now trade the EARNX token with USDT and XRP. EarnX is also a pillar in the Binance Smart Chain’s DeFi and NFT landscape. With continued partnerships and exposure coming to life, EarnX is looking to continue to be aggressive with the growing DeFi and NFT landscape.
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Flare Finance Announces Partnership with XinFin Network
Flare Finance has announced a partnership with XinFin Network which could be one of the most significant events of crypto space in 2021. While a lot has been spoken about interoperability and bridging communities, Flare Finance is on the way to becoming the epicentre of communities. With this partnership, Flare Finance and XinFin Network would have a bi-directional bridge allowing assets from either chain to be wrapped and utilized onto the other chain. So, essentially XDC would be wrapped and bridged from XinFin Network to Flare Network. Similarly, Flare Network tokens could be minted to XinFin Network bringing F-Assets to XinFin Network.
The True Interoperability
Flare Finance has also announced that it will support XinFin Network’s native token, XDC across all the products. This would mean that XDC holders could mine YFIN by participating in the Flare Farm or XDC holders could use their XDC as collateral via FlareLoans to take out loans or borrow stable coins by staking XDC while earning a variable APY in YFIN on borrowing as well as lending. Flare Finance has a total of 6 products which can be studied in detail from the Flare Finance website. It is important to note that Flare Finance is the first DeFi network to be built on Flare Network. However, even before its release, many are already anticipating Flare Finance to become the best DeFi Network.
It is essential to understand that Flare Finance is a separate entity from the Flare Network and is a platform built on it. The Flare Network is a distributed network running the Avalanche consensus protocol adapted to the Federated Byzantine Agreement and leveraging the Ethereum Virtual Machine. It aims at unlocking the value of locked assets on chains that do not have native smart contracts. This will enable additional utility for these tokens while the network’s native token will function as collateral for the trustless issuance of assets. XRP, XLM, Doge, and LTC will be the F-assets at the launch of the network. Once the network is live, other assets could be added based on voting. Algorand and XDC are a few tokens that are anticipated to apply for integration with Flare.
XinFin Network
On the other hand, XinFin Network is an enterprise-ready hybrid blockchain for trade and finance. It is widely considered as an alternative to Ethereum courtesy of its capacity of 2000 TPS with low fees. The average time to complete a transaction on XinFin Network’s protocol, XDPoS, is only 2 seconds. XinFin Network is also counted among the most energy-efficient networks as it consumes only around 0.0000074 TWh as per data available on XinFin website. XinFin Network is also believed to be working with governments to reduce the gap in global infrastructure. Private chain generation, EVM parallelization, and hardware integration are expected to arrive on the XinFin Network in the future.
The Future of DeFi
Flare Finance has already announced that a range of assets including FLR, XRP, LTC, XLM, DOGE, ALGO, ADA, SHIB, SANSHU, TEL, CEL, BNB, CAKE, and now XDC would be utilized in the Flare Finance ecosystem. More assets are expected to be added by voting once the network goes live. With such a well-rounded ecosystem comprising assets from across chains, Flare Finance is not only linking these chains but communities and ecosystems as well.
For DeFi to ever become a viable alternative to banks for the general public, such wider integrations would be vital. It appears Flare Finance has already taken the first step in the right direction and positioned itself to be a leader of DeFi space. The race to be the top DeFi platform has only intensified with the advancements made by Flare Finance. The game is only beginning, so HODL your bags and be prepared to become part of cutting-edge DeFi platforms.
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How China Bitcoin FUD Is Lowering The Cost To Produce BTC
Bitcoin FUD out of China might be helping to lower the cost to produce BTC.
The news of the crackdowns on mining farms in China has rocked the market lately. Entire mining operations were shut down and they had to be moved to other sites. No one is sure where the rigs will be moved to yet. Speculations are that North America would be a new base of operations for the facilities that have had to move their operations out of China.
Mining in China accounts for about 70 percent of all mining operations carried out in the world. This means that with China closing down mining farms, the hash rate has reduced. Firms have had to look for ways to ship their rigs outside of the country.
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Energy consumption is a huge pain point when it comes to mining. China has cheap energy costs which is why it was an ideal destination for miners.
But regardless of the low energy costs in the country, it takes a lot of energy to power the computers that are used for mining. Energy costs are significant and in line with their cost of production, firms set the price of their mined coins accordingly. This is in an effort to make sure that they are able to cover running costs while also turning a profit at the same time.
Bitcoin Price Floor
With so many rigs out of service, this has significantly lowered the amount of electricity consumed in the mining of Bitcoin.
The price floor of Bitcoin has always been the amount of energy required to mine the coins. This is known as the historical price floor.
Like with anything, the lower it costs to produce, the lower the price. And Bitcoin has been proving to be no different.
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With reduced energy consumption which translates to reduced energy cost, the price floor of Bitcoin is falling, and it continues to floor. As such, the price is keeping in line with the price floor and going down.
China FUD And Price
FUD has always had a big effect on market prices. With a major one like China shutting down mining due to environmental reasons, it can lead to fear, which can lead to dumping.
The crypto market is also subject to laws of economics like other assets. A higher supply than demand will lead to a lower price. While a lower supply and higher demand will lead to a higher price. Dumping basically increases the supply of coins in the market as people get rid of their holdings due to fears.
Bitcoin price chart | Source: BTCUSD on TradingView.com
So while the crackdown might be lowering the cost of producing BTC, it is not necessarily having a good effect on the price of the asset.
The news of the crackdown pushed the coin below the $40k threshold. Leaving the coin struggling to climb back up.
With so many mining rigs out of commission in China, the miners online are experiencing higher profit rates due to the reduced hash rate. This makes them more likely to sell their coin for less. Exchange prices always adjust to the prices of the buy and sell orders. And if the prices on the orders are lower, the overall price of the coin is going to follow this and go down.
The price of Bitcoin is currently at a little less than $37k. It’s down from its $41k high from this week.
Featured image from Bitcoinist, chart from TradingView.com
The Missing Ingredient From A Full On Bitcoin Reversal
Bitcoin price is back around $35,000 and has failed to retake $40,000 despite several low timeframe reversal signals building.
When looking back at past breakdowns following significant rallies, there could be a missing ingredient needed for a full on reversal, and it could have to do with the Bollinger Bands.
All About The Bollinger Bands And How To Use Them Effectively
The Bollinger Bands are named after the tool’s creator, John Bollinger. The tool has a variety of use cases as it applies to technical analysis, but is most notably used for measuring volatility. When the two outer bands – standard deviations of a simple moving average – begin to contract and tighten, it signals a massive release of energy is coming soon enough.
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When the outer bands do expand, they also act as support or resistance, and the middle-SMA does the same. The middle-SMA can also be used reliably as a buy or sell signal when price action closes through it.
But it is that support and resistance that the outer bands often supply that might be crucial to forming a proper Bitcoin bottom and one that holds for new highs.
Bitcoin price action might require a touch of the lower BB as it has during past bear phases | Source: BTCUSD on TradingView.com
Why Bitcoin Price Action Might Need The Momentum Of The Lower Band
In the chart above, a touch of the upper band after “riding the bands” to new local highs has always resulted in a short-term top. Crossing through the middle-SMA from there switches from bull to bear market, and the downtrend doesn’t end until the bottom Bollinger Band it tapped.
The 2017 bull market peak resulted in a sharp selloff, but then price action hung around the middle band for nearly a year before the deep plunge in late November 2018. From there, Bitcoin “rode the bands” again but this time on the way down.
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When the middle-SMA was finally reclaimed, the top cryptocurrency shot right back to $14,000 and hit the upper band once again. Losing the middle-SMA once again started a bearish phase. A bull run likely would have blossomed sooner but COVID had other plans, and after Black Thursday instead the buy signal stuck.
From there, Bitcoin rocketed to above $60,000 where the current all-time high now set. Bitcoin price is once again simply hanging around and might need to touch the lower Bollinger Band to gain enough momentum to push through resistance and reclaim highs.
As history has shown, however, getting back above that middle-SMA means a lot, and is the first step toward bulls restarting the rally again.
Featured image from iStockPhoto, Charts from TradingView.com
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Goldman Sachs Partners With Galaxy Digital For Bitcoin Futures
Goldman Sachs furthering investment into bitcoin, and even crypto more broadly, shouldn’t surprise anyone too much by now. The top-tier global investment and financial services firm has emphasized this quarter as the one to get their crypto services in swing, and this recent partnership announcement falls in line with exactly that.
The Partnership Perspective: Galaxy Digital
According to a CNBC report, Goldman Sachs is teaming up with Mike Novogratz’s crypto merchant bank, Galaxy Digital. The partnership will enable Galaxy Digital to be Goldman’s liquidity provider for bitcoin futures buy and sell orders on the CME Group derivatives exchange.
In a statement regarding the partnership, head of digital assets for Goldman Sach’s Asia-Pacific region Max Minton said “our goal is to equip our clients with best-execution pricing and secure access to the assets they want to trade. In 2021, this now includes crypto, and we are pleased to have found a partner with a broad range of liquidity venues and differentiated derivatives capabilities spanning the cryptocurrency ecosystem.”
The team at Galaxy Digital is of course optimistic looking forward; Galaxy co-president Damien Vanderwilt went on the record in an interview last week stating that “once one bank is out there doing this, the other banks will have [fear of missing out] and they’ll get on-boarded because their clients have been asking for it”. Vanderwilt’s suggestion that other banks will follow suit is certainly not out of the question, either. “There’s a whole dynamic with the major banks that I’ve seen time and time again: safety in numbers”, said Vanderwilt.
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More “Bank” For Your Buck
Banks are understandably timid when it comes to diving in, but crypto derivatives have been a speculative tool that many see as a gateway for more financial services firms to get involved. This is because of strict regulations that make bitcoin difficult to maneuver around traditionally, but more streamlined in the derivatives landscape.
The partnership news comes less than a week following reports that Goldman Sachs is planning to offer clients the ability to trade options and futures in ethereum. Additionally, the news comes just a few short months after the company resurrected plans from roughly four years ago around a cryptocurrency trading desk. That trading desk, sure enough, came to life last month.
Speculation is abound that the recent partnership for Goldman could apply pressure on the rest of the institutional marketplace to follow in their tracks.
Crypto's continued emergence throughout 2021 have reeled in traditional investors to apply pressure financial services companies to service crypto assets. | Source: CRYPTOCAP on TradingView.com
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Featured image from Pixabay, Charts from TradingView.com
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