A report from the Bitcoin-only exchange River suggests increased Lightning usage will play a key role in Bitcoin becoming a better medium of exchange.
These Are The Bitcoin Predictions For 2023 By Arcane Research
Historically, 2022 could end up being the second-worst year for Bitcoin since 2011. At the current price, BTC has a year-to-date (YTD) performance of -65%, topped only by 2018 when the price lost -73% in one year.
As Arcane Research notes in its year-end report for 2022, physical gold (-1% YTD) has significantly outperformed digital gold, Bitcoin, in a period of high inflation. As a result, the analytics firm notes that the digital gold narrative was premature.
As Arcane Research notes, the crypto winter was essentially fueled by tightening macroeconomic conditions and crypto-specific leverage and miserable risk management by core market participants. BTC had followed the U.S. equity markets due to its high correlation.
“Apart from two distinct events in 2022, BTC followed U.S. equities very closely. The two outliers of June (3AC, Celsius etc.) and November (FTX), are responsible for the entire underperformance of BTC vs. the U.S. equities,” the report states, displaying the following chart.
Bitcoin Predictions For 2023
For the coming year 2023, Arcane Research expects that contagion effects will “probably” continue in early 2023. “[B]ut we view it as likely that the majority of 2023 will be less frantic and borderline uneventful compared to the last three years,” Arcane Research predicts.
With that in mind, the firm expects Bitcoin to trade in a “mostly flat range” in 2023, but to finish the year with a higher price than it did at the start.
Bitcoin’s current drawdowns closely resemble the bear market patterns of previous cycles, Arcane Research elicits. While the 2018 bear market lasted 364 days from peak to end, the 2014-15 bear market lasted 407 days. The current cycle is on its 376th day. This puts the ongoing bear market exactly between the duration in both previous cycles.
“If a new bottom is reached in 2023, this will be the longest-lasting BTC drawdown ever,” the firm said and further elaborated that there are quite a few potential catalysts for a renowned bull market:
The FTX proceedings may incentivize more rapid progress with regulations, and we view both positive signals related to U.S. spot BTC ETF launches and more coherent classifications of tokens as a plausible outcome by the end of the year, with exchange tokens being particularly exposed for potential security classifications.
Regarding Grayscale’s Bitcoin spot ETF application, February 3 will be an important date for the industry when the three-judge panel will rule on the SEC complaint.
In addition, Arcane Research expects another catalyst from Europe: namely, the passage of the MiCA Act by the European Parliament in February 2023. The core prediction for 2023 remains that Bitcoin will recover despite the tightening macroeconomic situation and that now is “an excellent area to build gradual BTC exposure.”
However, the start of 2023 could be bumpy as trading volumes and volatility decline in a much duller market than in the past three years. In summary, Arcane Research therefore estimates:
As we advance into the next year, patience and long-term positioning will be key.
At press time, the BTC price traded at $16,497, facing further downward pressure, probably due to tax harvesting by year-end.
Bitcoin Pound Sterling Volume Soars To ATH Amid Currency Crisis
The pound sterling is experiencing heavy turbulence. The dollar is eating it all. Bitcoin is in a deep slumber. What a time to be alive! Things are moving and shaking in the finance world and the general population can’t do much but watch the show. And place their bets. British people recently saw the pound sterling and the euro sink to all-time lows against the dollar. A percentage of the population reacted by acquiring bitcoin, the charts show.
Another important factor is that the pound sterling’s “volatility last week was highly unusual, creating opportunities and price discrepancies.” The currency crisis created potential possibilities, and British traders seem to have taken advantage of them. As a reminder, the pound sterling saw “a feisty week in the UK pending proposed and later abandoned tax cuts.” This is all according to Arcane Research’s The Weekly Update.
In Bitcoinist’s first report on the situation, our sister site said:
“The UK’s interest in Bitcoin (BTC) will expand “quite quickly” as fiat currency instability makes the flagship digital currency asset resemble a stablecoin, analysts said.
As one of several this week to highlight BTC’s attractiveness over the pound sterling, strategy adviser at financial firm VanEck Gabor Gurbacs came to that decision.
“Because of the instability of the pound,” Gurbacs warned, “the United Kingdom will get orange-pilled very rapidly.”
The last factor to analyze is this one, “most of the growth was concentrated in spiking volumes on Bitfinex.” Why was that? Keep reading to find out.
By The Numbers: The Pound Sterling ’s Busy Week
The headline is this one: the BTCGBP trading volume’s 7-day average reached an all-time high this week. Also, surprising no one, “similar tendencies occurred in ETHGBP.” How high was the all-time high, though? Back to The Weekly Update, “BTCGBP pairs saw trading volumes climbing above 47,000 BTC last Monday, after having experienced growth throughout the latter parts of September.”
BTCGBP Trading Volume (7d Moving Average) | Source: The Weekly Update
As for the reason for the pound sterling to bitcoin movements, Arcane Research’s analysts blame it on “market maker rebalancing.” Although they also recognize that bitcoin is “gaining mind share amidst declining trust in the British Pound.”
A similar thing happened to the Russian ruble at the beginning of the conflict with Ukraine. At the time, our sister site Bitcoinist reported:
“The new all-time high on the BTCRUB pair is the result of the Russian ruble falling more than 50% against the United States dollar since the start of the year. As the global reserve currency, most financial assets are priced in USD.”
Will the pound sterling rebound as fast as the ruble did? Or will the dollar continue to dominate for the foreseeable future?
BTC price chart for 10/05/2022 on Gemini | Source: BTC/GBP on TradingView.com
Why Was Most Of The Growth On Bitfinex?
The analysts at Arcane Research identified another fascinating factor. An incentive, if you will. They named it a “prolonged structural mispricing” and it refers to a “dollar-adjusted premium or discount in Bitfinex’s BTCGBP pair last week.” All you have to do is adjust “the BTCGBP pair to USD,” to see that the pound sterling / bitcoin pair “traded at a significant discount to dollar spot.” This was an effect and not a cause. The market movements created this arbitrage opportunity. People who detected the incentive on time, profited.
“As the GBP bottomed vs. the USD, BTCGBP traded at a massive discount compared to BTCUSD. The discount turned into a prolonged premium with certain wicks deep into discount terrains as GBP traded in a highly volatile environment.”
Despite the significance of this factor, Arcane Research still believes that “the predominant force was market makers reducing their exposure” to the pound sterling.
Featured Image by Ewan Kennedy on Unsplash | Charts by TradingView and The Weekly Update
Post-Merge Profit-Taking Cuts 13% Off Ethereum Ratio Against BTC
We’re in a post-merge world, and the lessons keep arriving. As it turns out, the mythical Merge was a sell-the-news event for Ethereum. Technically, the event was a success and Ethereum kept a 100% uptime as optimistically predicted. Economically, the asset has been bleeding for the whole post-merge season. As a result, Ethereum lost ground against bitcoin, and bitcoin dominance is back up.
Let’s go to Arcane Research’s The Weekly Update for the exact stats and numbers:
“Since the merge, Ether (ETH) is down 17% in USD and down 13% compared to BTC, with ETHBTC currently trading at 0.07. ETH has found support at 0.07 ETHBTC, which represents the average ETHBTC price over the last 365 days.”
Will this become a tendency or are these just the post-merge jitters?
The Post-Merge Post-Mortem
For a rational analysis, let’s quote The Weekly Update:
“Ether traded idly after the merge, and volatility remained low until U.S. markets opened down. The ETH blow was related to a correlated environment to risk assets, but excess leverage from long traders contributed to exacerbating Ether’s relative underperformance versus BTC.”
And the fact of the matter is that the old adage “buy the rumor, sell the news” applies perfectly here. Fuelled by hype, Ethereum’s price ballooned before the event. It was still far away from its all-time high of around $4,8K, but $1.7K was great for the market we’re in. The asset outperformed bitcoin and threatened its dominance. It was overbought, though. Post-merge, people sold and ETH is now in a downtrend. Textbook behavior that shouldn’t surprise a soul.
The chart to watch, though, is that of Ethereum’s issuance. The main difference between the post-merge Ethereum and its predecessor is that the new coin will be much more scarce. And that could affect the price tremendously.
ETH price chart for 09/21/2022 on Bittrex | Source: ETH/USD on TradingView.com
State Of The Ethereum Forks
One of the drivers of the pre-merge rally was the expectation that there might be forks and there might be airdrops. Two brand new Ethereum forks emerged from the messy situation. Those two suffered the most during this post-merge period. Back to The Weekly Update:
“Ether has not struggled in isolation, Ether forks have experienced severe headwinds, and both ETHW and Poloniex’s competitor fork EthereumFair (ETF) have seen more than two-thirds of their valuation slashed since launch.”
This brutal smackdown was to be expected. All forks generate something akin to an airdrop, as people received the equivalent to the ETH they had in ETHW and ETF. Users exchanged that free money for harder currencies pretty fast. And now it’s time for those forks, who the all-powerful stablecoins don’t support, to prove their worth.
An older fork was also in the news because of the merge and has been struggling as much as its cousins.
“Ethereum Classic has also underperformed versus ETH. Amid the merge, many miners migrated to ETC, leading ETC’s hashrate to peak at 300 TH/s. However, as the difficulty has increased in ETC, the hashrate in ETC has declined to 186 TH/s”
Some people thought that Ethereum Classic, who remains a Proof-Of-Work blockchain, was going to thrive post-merge. So far, they’ve been proven wrong. But we’re in the early innings and things might drastically change for old reliable Ethereum Classic.
ETHBTC price chart on Binance | Source: The Weekly Update
Conclusions
Apparently, the merge was a success but the price didn’t hear the news. However, we should take into account that September is usually a bad month for cryptocurrencies in general. That, mixed with the classic “buy the rumor, sell the news” behavior have ETH against the ropes. For now.
Featured Image by Gerd Altmann from Pixabay | Charts by TradingView and The Weekly Update
Bitcoin Dominance Reaches All-Time Lows As The Merge Nears
The mythical merge is almost here. Ethereum’s transition from Proof-Of-Work to Proof-Of-Stake is the most talked about event in crypto at the moment, and money is flowing to that blockchain. That, in turn, translated into a decrease in bitcoin dominance. That metric measures the percentage of the whole crypto market that bitcoin represents, and it’s currently “down at levels not seen since 2018.” Which makes sense. Because the merge is almost here and everyone placed their bets.
According to Arcane Research’s The Weekly Update, “the all-time low occurred during the ICO craze in January 2018.” Which makes sense, because ICOs were the talk of the town at the moment. That impetus eventually fizzled out, however. Can we expect the same out of the merge? On the one hand, this is a structural change on Ethereum as a whole, so it’s more important than ICOs ever were. On the other hand, stakes are higher and there are no guarantees that the merge will work out as planned.
The Merge Isn’t The Only Factor
Before advancing, let’s explore Arcane Research’s stats:
“September has started with varying returns among our indexes. Bitcoin has started the month the worst and is down 1%. All other indexes are in the positive territory, with the Large Caps gaining 1%, the Small Caps 2%, and the Mid Caps 7%.”
So, everyone and their mothers gained ground on bitcoin these last few weeks. Especially the Mid Caps, with Ethereum Classic as an unlikely leader. This almost forgotten cryptocurrency is also gaining ground because of the merge. When Ethereum turns from Proof-Of-Work to Proof-Of-Stake, a whole industry will disappear. The new system doesn’t require miners, so all of them are exploring their options and the original Ethereum seems to be the big winner in this scenario.
However, there’s another Classic cryptocurrency that grew even more. Back to The Weekly Update:
“While the large caps’ performances have been mostly flat over the previous seven days, we see massive increases in some of the smaller coins. Terra Luna Classic surged by 222% amid plans to revive the chain, while Ethereum Classic increased by 20%.”
So, even though it’s a big factor, it’s not all about the merge. Arcane Research offers even another important factor:
“An essential caveat of the bitcoin dominance sitting close to an alltime low is that stablecoins are far more significant now than the last time bitcoin showed this low dominance. Excluding the USDT and USDC from the equation, we see that bitcoin still makes up half of the crypto market.”
Market Cap BTC Dominance on CryptoCap | Source: TradingView.com
Bitcoin Dominance Over The Last Few Months
We at NewsBTC constantly monitor bitcoin dominance so you don’t have to. The field is more volatile than you might think. Two months ago, our report highlighted the following:
“Over the last couple of days, bitcoin has watched its market dominance declined by more than 2%. This market share was quickly soaked up by Ethereum, which has seen its dominance rise in this time period. It added more than 2% to go from straggling around $16% to its current dominance of 18.9%.”
However, last month the report’s title was “Bitcoin Dominance Grows As Crypto Risk Appetite Remains Low.” The reason for this was:
“Arcane Research noted that the overall weakness in the sector is driven by a “natural rotation as traders seek safety in a falling market”. The increase in Bitcoin dominance has been accompanied by a rise in stablecoin total market share.”
So, the bitcoin dominance metric is a roller coaster and the merge approaching generates extra volatility. At the moment, according to Arcane Research, ETH is at 20.35%, and BTC is at 38.26%.
Before we go, there’s one last factor to analyze. On September 13th, the US will release its CPI for August. The estimation is that the interest rate will hike by 75bps, but the reality is that anything can happen. And the announcement will come in tandem with the merge. Fun times ahead.
Featured Image by Chris Sabor on Unsplash | Charts by TradingView
Arcane Research: Stablecoins Supply Drops Almost 19% In Q2 2022
The total supply of stablecoins decreased globally by 18.8% at the end of the second quarter of 2022 as the equities markets and risky assets experience volatile times due to rising inflation and other macro reasons.
Stabelcoins Supply Falls In The Second Quarter
Digital tokens called stablecoins are anchored to fiat money like the dollar. These currencies are supported by a combination of cash reserves, commercial holdings, and other physical assets and make use of blockchain technology.
This week, Arcane Research released a paper that detailed the supply pattern. In their analysis, Arcane looked at supply information for popular tokens like USDT, USDC, BUSD, DAI, MIM, and USTC.
Data indicated that the overall supply was above $180 billion in May 2022. By the end of the second quarter, that amount had dropped to $151.3 billion, indicating an 18.8% decline in worldwide supply.
The report claims that the significant reduction, which is estimated to be worth $35.1 billion, is the greatest quarterly supply drop in stablecoins history. This occurs at a time when the cryptocurrency market is struggling and the prices of market leaders like Bitcoin have fallen dramatically.
The crypto ecosystem entered the seven seas in 2022, and stablecoins were not left unphased.
To understand how stablecoins navigated the stormy market conditions and whether Arcane’s stablecoin predictions for 2022 stand the test of time, click below:https://t.co/uL5tTWFQlT
— Arcane Research (@ArcaneResearch) July 26, 2022
Suggested Reading | TRON Bulls Are Back To Pump Some Energy Into TRX Coin
USDC To The Top
In particular, Arcane’s report anticipates a rise of USDC to the top. In fact, the analysis predicted that somewhere in October 2022, the market value of USDC will increase by around USDT.
According to Arcane, Tether (USDT) has been the market’s largest stablecoin, fully utilizing the first mover advantage. However, in November 2021, it decreased by 50%. As the market capitalization of USDT fell from $78 billion to $66.3 billion in 2022, the fall continued.
USDC market cap at $54 Billion. Source: TradingView
The top two stablecoins in cryptocurrency at the time of publication are USDT and USDC. The market capitalization of both tokens is over $50 billion. Binance USD (BUSD), the nearest rival, comes in third with a market worth of roughly $17.83 billion.
Related Reading | Ethereum Merge: How ETHBTC Could Hint At A Return Of Risk Appetite
Featured image from iStock Photo, charts from TradingView.com, Arane research
Large institutions sold $5.5B in BTC since May — and we’re still here
Massive sell-offs from institutions appear to have been the driving force behind the drop in Bitcoin price since May, according to an analyst from Arcane Research.
Ethereum Merge: How ETHBTC Could Hint At A Return Of Risk Appetite
The merge is near, so it’s Ethereum time to shine. The eternal second most popular cryptocurrency by market capitalization has been outperforming bitcoin for the last few days. Is the reason the return of the market’s appetite for risk? Or is it just the fact that Ethereum’s developers announced a specific date for the mythical merge? Let’s examine the numbers, the facts, and the experts’ opinions to figure out exactly what’s going on.
In The Weekly Update, Arcane Research’s newsletter, they point out that the ETHBTC pair surged “ from 0.053 on July 12th to 0.7 on July 19th.” It’s at “levels not seen since mid-May,” but why? According to Arcane, it “might be related to increased risk appetite in the market, evident by sharp altcoin recoveries across the board.” They identify another factor, “Celsius repaid its DeFi loans. This contributed to reducing the downward gravitational pull enforced by potential liquidations and contagion-related uncertainty.”
And then, of course, there’s the merge.
What Do The Experts Say About The Merge?
The facts are the facts, Ethereum is on a roll. In a previous report, NewsBTC analyzed the state of the market:
“Ethereum has now broken above an important technical point. After trending below the 50-day moving average for the better part of last month, ETH has flipped this technical level and is now sitting comfortably above it. The implication of this has been a complete 180-degree turn from bearish to bullish, especially during the short term.”
As for the probable cause, Arcane Research already named two. The main one, though, is the possibility of the merge. Back to The Weekly Update:
“On Thursday, July 14th, the Ethereum Foundation member Tim Beiko suggested Sept 19th as the tentative launch date for the merge. This might have benefited ETH, leading to last week’s surge. Following the announcement, Lido’s staked ETH token has neared ETH parity.”
In another NewsBTC report, we quoted another expert trying to make sense of the situation. According to Youwei Yang, director of financial analytics at StoneX, the causes for the recent surge are:
“The first is the recently announced time for the Ethereum “merge” update, which should make the network significantly more energy-efficient. Yang claims that the “calming” of macroeconomic anxieties is the second.”
ETHBTC price chart on Coinbase | Source: ETHBTC by The Weekly Update
Is Ethereum’s Merge a “Buy The Rumor” Event?
The change from Proof-Of-Work to the Proof-Of-Stake consensus mechanism does use less energy, but brings its own set of problems with it. Discussing those is beyond the scope of this article. The important part of the equation for Ethereum holders is that the merge will finally bring native staking to the blockchain. The thousands of ETH already locked into the Beacon Chain will finally produce real results, and a new kind of user, the validators will rise.
Is this enough to justify the price surge? Absolutely. Is it guaranteed that the merge will happen on September 19th? Probably not, considering Ethereum has postponed its difficulty bomb five times already.
ETH price chart for 07/20/2022 on Bitfinex | Source: ETH/USD on TradingView.com
Is The Contagion Event That Sent Everything To Red Over?
According to Arcane, “contagion seems to be resolving now, with prices stabilizing. This recovery may be viewed as a healthy confirmation of the market normalizing as market stress settles down.” Their interpretation of the situation might be overly optimistic, though. A pseudonymous Twitter user that identifies himself as “a trader/defi analyst at a major crypto fund and use Nansen almost daily,” thinks more pain is on the way with or without the merge.
4/
There are dozens of wallets just like these that 3AC still has with thousands of ETH. It’s very likely that all of these wallets are going to be liquidated in order to pay back creditors. Check out the number of funds that have been moved around from just one wallet alone. pic.twitter.com/75HkR097zV— jbjbjb (@bryptobricks) July 19, 2022
The Three Arrows Capital trial is still unfolding, and “3AC still has with thousands of ETH. It’s very likely that all of these wallets are going to be liquidated in order to pay back creditors.” If that happens, it’s “going to cause a harsh sell-off across the broader crypto ecosystem, setting up the next catalyst down.”
Sorry to rain on Ethereum’s parade, but those are the facts. Good luck with the merge, though.
Featured Image by Loic Leray on Unsplash | Charts by TradingView and The Weekly Update
ARK: “Bitcoin’s Correlation With The S&P 500 Reached” ATH, Opportunity Knocks
This counterintuitive thinking by ARK Investment is the reason why we subscribe to their “The Bitcoin Monthly” report. While everybody complains about bitcoin’s dance in unison with the stock market, they keep it cool and even frame it as an opportunity. Which it is. It’s not ideal that traders treat bitcoin like a risk-on asset, but there’s certainly logic behind it. Short-sighted people see bitcoin as an investment vehicle and little else.
Excited to introduce the first official issue of “The Bitcoin Monthly”
Starting this month, ARK will be publishing an in-depth report covering Bitcoin’s market action and sharing where we think the market's headed.
Here are the major highlights from this month’s report:
— Yassine Elmandjra (@yassineARK) June 3, 2022
In our first article about “The Bitcoin Monthly,” we defined it as:
“Over at Twitter, ARK Analyst Yassine Elmandjra described “The Bitcoin Monthly” as: “Starting this month, ARK will be publishing an in-depth report covering Bitcoin’s market action and sharing where we think the market’s headed.” On ARK’s website, they describe the new venture as: “Considering the market’s fast pace of change, ARK publishes The Bitcoin Monthly, an “earnings report” that details relevant on-chain activity and showcases the openness, transparency, and accessibility of blockchain data.”
BTC p- S&P500 Correlation | Source: “The Bitcoin Monthly”
ARK On Bitcoin’s Correlation With The S&P 500
When the Russia/ Ukraine conflict started, it seemed like bitcoin was not in synch with traditional markets anymore. However, the tide quickly turned. By May, “Bitcoin’s correlation with the S&P 500 reached an all-time high of 80%.” The previous ATH was way back in October 2020, near that magical time when bitcoin woke up from a hundred years’ nap to pass the $20K line for the first time.
"If your time horizon is one month, Bitcoin looks like a volatile asset. If your time horizon is 10 years, it looks like a risk-off store of value."
– @saylor
I couldn't agree more.
— Dr. Jeff Ross (Pleb counselor) (@VailshireCap) June 15, 2022
So, what’s ARK ‘s take on the situation? Well…
“Based on fundamentals, we believe bitcoin and most equities should not be highly correlated, highlighting a potentially significant market inefficiency.”
A “significant market inefficiency” is an investor’s wet dream. It means that you’re seeing something that the market’s not. It means opportunity. If you play your cards right, it could mean money. How to use that “significant market inefficiency” in your favor, that’s another question altogether. Take into account that “Bitcoin still faces an uncertain macro environment, as the global economy shows signs of a recession,” though.
Let’s also take into account these recent words by MicroStrategy’s Michael Saylor, “If your time horizon is one month, Bitcoin looks like a volatile asset. If your time horizon is 10 years, it looks like a risk-off store of value.” Apparently, bitcoin traders suffer from high time preference. And that probably explains the correlation with the S&P 500.
BTC price chart for 06/16/2022 on Binance | Source: BTC/USD on TradingView.com
Arcane Research Weights In
ARK isn’t the only game in town. Our friends at Arcade Research have the most recent information regarding bitcoin’s correlation with the S&P 500, “BTC followed U.S. markets closely on Friday and, in extension, also during this weekend. However, as prices plummeted, new ghosts emerged, and the dangers of impactful insolvencies have contributed to further drag on the crypto market,” they say in “The Weekly Update’.”
When Arcane Research says “ impactful insolvencies,” they certainly refer to the Celsius case.
“While the crisis in Celsius has contributed to putting a further drag on the market, the initial catalyst was the inflation surprise in the U.S. We note a decline in the 90-day correlation between BTC and S&P 500. However, short-term correlations grew heavily following Friday’s inflation news – with the market preparing for more hawkish policies enacted by the FED.”
The fact of the matter is that bitcoin’s price is determined at the edges of the network. And high time preference people are trading there. And if they want to treat bitcoin as a risky asset, there’s nothing anyone can do about it. Except, somehow, taking advantage of the opportunity it brings.
Featured Image by Sergei Tokmakov Terms.Law from Pixabay | Charts by TradingView and “The Bitcoin Monthly”
War coincides with Bitcoin’s highest ‘real’ volume since early December
“Investors are speculating that crypto will become increasingly important apolitical and trustless money in a time of escalating geopolitical uncertainty, conflict, and capital controls,” Arcane Research wrote.
Bitcoin Volatility Drops To 15 Month Low; What This Could Mean
Is this the calm before the storm? Bitcoin volatility is seldom this steady. After a tumultuous downturn that had the whole market upside down, bitcoin’s fiat price is relatively flat. Everyone can breathe and rest, for a while at least. What does this mean and how long will it last, though? That’s what we’re here to explore.
Related Reading | Dwindling Bitcoin Volatility Could Lead To Decisive Move
It’s no secret that the market was expecting a hike in the interest rates, and thus people were selling risky assets. However, the powers that be postponed the increase, and, well, the market calmed down. During this downturn, though, Bitcoin proved once again that the market considers it the least risky asset in the cryptocurrency space. Everyone bled, but Bitcoin considerably less so.
In any case, back to volatility, Arcane Research’s The Weekly Update has the scoop:
“Bitcoin’s 7-day volatility is now at the lowest level since November 2020. Together with the trading volume, the volatility exploded last week when bitcoin dropped below $40,000. After bottoming at $33,500, the bitcoin price has been slowly grinding upwards, and it looks like the market has released sufficient pressure for now. Still, we might see new volatility peaks soon as bitcoin trades closer to several key resistance and support levels that might be catalysts for increased volatility.”
The pressure is off, but, the steadiness might not last. If there’s one thing we can count on in regards to bitcoin is this: volatility will return sooner than later, for better or worst.
BTC/ USD Volatility | Source: Arcane Research’s The Weekly Update
What Are The Resistance And Support Levels?
Bitcoin “has been slowly grinding upwards,” and it’s getting close to that magical number 40. Again, The Weekly Update:
“$40,000 is a key resistance level. With BTC’s slow grind upwards lately, we could see BTC testing this resistance level shortly. A breakthrough would be a relief for the bulls and could signal a trend reversal.”
On the other hand, if things go south and the market starts bleeding again, there’s another number that we have to be aware of:
“Towards the downside, $32,500 acted as support during the initial sell-off, but $29,000 remains as the most critical support level. A breakout below $29,000 would be unsettling, which could cause havoc in the market.”
If Bitcoin touches 40 or 29, the boat might start to rock. Fasten your seatbelts and be sure to wear a life jacket.
BTC price chart for 02/01/2022 on Bitstamp | Source: BTC/USD on TradingView.com
What Causes Bitcoin Volatility?
The short answer is supply and demand. However, since the Bitcoin economy is still small compared to the world’s, several factors can upset or propel the price. From any kind of news to influencers’ opinions to regulation talk or concrete action to whales dumping on the market to interest rates hike rumors. Anything. Also, take this Investopedia insight into account:
“Bitcoin has only been around for a short time—it is still in the price discovery phase. This means that prices will continue to change as investors, users, and governments work through the initial growing pains and concerns until prices stabilize—if a stable point can be reached.”
Related Reading | This Bitcoin Volatility Index Pattern Suggests A Short Squeeze May Be Near
Yes, Bitcoin is the largest cryptocurrency by far and Fidelity thinks it “should be considered first and separate from all other digital assets that have come after it.” However, the asset is still a wild teenager. Expect volatility and learn how to deal with it. It’s going to be a bumpy ride.
Featured Image by Pexels on Pixabay | Charts by TradingView
Arcane Research releases its crypto predictions for 2022
The research firm made numerous predictions about crypto in 2022 about the price, regulations, Bitcoin’s hashrate, and even the fate of XRP and ADA.
Binance Coin Dubbed “Winner Of 2021” By Crypto Research Firm
It’s official, this was Binance Coin’s year. There are no two ways about it, BNB crushed it throughout 2021 and cemented itself as the third more popular coin in the world by market capitalization. Not a small feat, considering the phenomenal year that altcoins had. Several projects had their moment in the sun, capturing capital, headlines, and attention. No one got near Binance Coin, though.
Binance Coin’s stellar performance | Source: The Weekly Update
According to Arcane Research’s The Weekly Update:
“Bitcoin may have beaten the stock market in 2021, but it has been left in the dust by other cryptocurrencies. Binance Coin (BNB) is the best performer of the three biggest cryptocurrencies by market cap, with a 1344% gain. The Binance Smart Chain ecosystem has seen massive growth in 2021, taking some market share from Ethereum.”
That’s why they dubbed Binance Coin as “the winner of 2021,” and their point is well taken. However, there’s more to the story. Binance as a company was in hot water for a while there. And their own validators blasted the Binance Smart Chain, saying things like, “There doesn’t appear to be any reasonable testing process in place. Every update appears to make things worse.”
Let’s explore the Binance Coin ecosystem’s tumultuous year.
Big Projects Decided To Operate On The Binance Smart Chain
There’s no denying it. As The Weekly Update says, “Ethereum has lost its indisputable position as the “one and only” smart contract platform.” And Binance has a lot to do with that. A controversial project from the start, the Binance Smart Chain has been dubbed a centralized Ethereum clone. And the critics have a point. However, even though the Binance team did fork Ethereum’s code, they were always upfront with the direction of the project.
In BSC’s documentation, the team shamelessly claims that the “Binance Smart Chain uses a consensus model called Proof of Staked Authority (PoSA). (…) This consensus model can support a short block time and low fees, and it only requires 21 validators to run.” Contrast that with the 11.000 nodes that reportedly support the Ethereum ecosystem.
However, their plan worked and projects flocked to it:
“Binance Smart Chain was developed explicitly to solve Ethereum’s rising gas fees and offers faster, scalable, and cheaper transactions. In the past, several alternative blockchains have tried to become ‘Ethereum Killers’ but couldn’t succeed in capturing new project’s interest. However, Binance Smart Chain is hosting numerous blockchain, Defi, and crypto projects.”
Problems And Connection To The Binance Coin
However, as in Ethereum’s case, success came with scalability problems. A set of validators took to GitHub to raise concerns about the state of the network and how running a complete node’s cost has increased tremendously. “There is no code review, patches are simply committed, in most cases even without a proper description of what they do or what problem they try to solve,” the original poster said.
“I’ve rarely seen something handled so unprofessionally,” the OP accused. “I have many full nodes running there and now all of them are unable to sync. Each of these servers costs me $800 per month (previously only $200), then you told me that I need faster bandwidth and disk which means the cost will keep rising,” a commenter claimed.
What does this have to do with the Binance Coin? Everything. As the native currency of the Binance ecosystem, BNB’s success is tied to the success of the whole network. Binance is still doing amazing, but, can Binance Coin holders count on that to be the case in 2022?
BNB price chart for 12/29/2021 on Binance US | Source: BNB/USD on TradingView.com
Make No Mistake, Binance Coin Won 2021
It was an action-packed year, but Binance Coin rose to the test. Besides the validators uprising, the Binance team took care of these flash loan hacks and kept BNB’s price rising throughout the year. When CZ himself called for other entrepreneurs to create their own coins, NewsBTC was the voice of reason:
“Binance is not only the biggest exchange in the world; it also has the most activities, features, things to do. BNB powers all of that. How many coins support that huge of an ecosystem? How many coins have that many use cases? And yes, BNB provides its user with superpowers while in the Binance ecosystem and helps them save money. How many other coins can do something similar?”
Let’s not kid ourselves, the Binance Coin AKA BNB is a unicorn. A one-of-a-kind project that did many things right and rewarded the early believers with a phenomenal year. A 1344% increase in price is not something we see every day. Congratulations to Binance Coin for owning 2021.
Featured Image: Foundry on Pixabay | Charts by TradingView & The Weekly Update
China Ban Aftermath: Why The Crypto Downtrend Could End On New Year’s Eve
Is the China ban to blame for the recent Bitcoin sell-offs that brought down the whole crypto market? That is the prevalent theory. As the main exchanges close their operations in mainland China, the citizens have been fearfully selling their assets. They don’t know if they’re going to be able to transact or even sell their cryptocurrencies in the future, so they’re going back to the Yuan. And we have charts from Arcane Research and a carrot to prove that.
Related Reading | Is This The Reason China Banned Bitcoin Mining? Carvalho’s Mind Blowing Theory
Let’s stop wasting time and go to the hard data.
How’s The China Ban Treating Huobi?
The headline, provided by this carrot, is the following. “Asia’s largest exchange, Huobi, has stopped related trading in China. Bitcoin has been flowing from Asia to the US and Europe for some time.” To elaborate on that, we bring out good friends at Arcane Research’s The Weekly Update. “The final impact of the Chinese bitcoin ban from September is unfolding. After gradually removing Chinese mainland users, Huobi’s share of the global open interest has fallen to 2%, down from its Feb 15th, 2020 peak of 20%.”
And they have the charts to prove it:
BTC Futures Open Interest, OKEx and Huobi | Source: The Weekly Update
And even more data and crucial dates:
“Huobi has accelerated its retirement of Chinese mainland customers. On Sept 24th, Huobi ceased registrations for new mainland Chinese customers. On Dec 15th, Huobi ceased spot trading for Chinese citizens. Additionally, from Dec 15th to Dec 31st, Chinese mainland customers are only able to sell digital assets.”
So, the crypto downtrend could end on New Year’s Eve because it’s the last day that Huobi’s “Chinese mainland customers” will be able to sell. This might sound like an exaggeration, but look at this bloody red chart:
The sell-pressure from China is real. Asia’s largest exchange, Huobi, has closed OTC and exchange transactions. Many people have been forced to sell their #bitcoin because they are worried they won’t be able to trade in the future. Huobi's net position change red past months: pic.twitter.com/gKInTQpE7k
— Root 
(@therationalroot) December 18, 2021
“The sell-pressure from China is real,” and it isn’t only coming from Huobi.
How’s The China Ban Treating OKEx?
The other Chinese giant’s situation is more complex. What’s going on in there? How are they handling the China ban? Rumors are flying. According to the carrot, “The ok exchange has not yet issued an announcement on the clearing.” The Weekly Update has a little more information, but it’s still convoluted.
“The public statements from OKEx are far more ambiguous than those of Huobi. The exchange has publicly stated that the exchange website will be inaccessible for mainland Chinese traders. Further, the exchange has stated that it will not set up offices and teams in mainland China while maintaining the policy of “exiting the Chinese mainland market.” In OKEx’s subreddit, the OKEx helpdesk shared a screenshot from its P2P market, currently allowing traders to trade using the Chinese Yuan.”
Related Reading | China Banned Bitcoin Mining. What Happens To Small Hydropower Stations Now?
As the first graph shows, OKEx open interest share is also in sharp decline. “In April 2020, OKEx accounted for 30% of the open interest in the futures market, in stark contrast to today’s 8% market share.” The signal is clear, even if the situation is not.
BTC price chart for 12/22/2021 on Coinbase | Source: BTC/USD on TradingView.com
What About Binance?
Sadly, we don’t have as much data about them. The carrot claims that “Binance will be partially cleared at the end of the year.” It also informs us that “Binance’s net position change recently red (likely because of China),” and gives us two very informative charts. In them, the sell-pressure that the China ban generated is obvious. While Binance is red, the US and Europe-centric Kraken is very much in the green.
If we compare this to Kraken, which is mostly active in US and Europe, we can see that they are clearly Buying The Dip. 
pic.twitter.com/qvBWknDKoX
— Root (@therationalroot) December 18, 2021
So, is the crypto downtrend going to end on New Year’s Eve? The data speaks for itself. Let’s cross our fingers, nevertheless.
Featured Image: Myriams on Pixabay | Charts by TradingView
Crypto Market Bloodbath Creates Largest Stretch Of Fear Since April Peak
As the downtrend in the crypto market continues, so does extreme fear. What’s inspiring the sell-off? Is it Omicron? Or is it Evergrande? Is it a conspiracy? Or is it the holidays? All those questions and more have had the Fear and Greed Index pointing left for a month straight. What does this mean? Where do we go from here? That’s what we’re here to explore.
Related Reading | Blood In The Streets: Crypto Market Becomes Fearful As Bitcoin Dives
But first, let’s talk about the Fear and Greed Index. One of the many Bitcoin indicators, it measures the market’s general sentiment at the moment. Zero is extreme Fear. A hundred is extreme Greed. And the indicator oscillates between those two at any given time. It’s been said that the crypto market is very emotional. The Fear and Greed Index is there to keep investors from making irrational decisions based on sentiment alone.
Fear And Greed Index shows Extreme Fear | Source: Arcane Research’s The Weekly Update
What’s The Fear And Greed Index Saying Now?
According to Arcane Research’s The Weekly Update, fear has settled in:
“The Fear and Greed Index has now signaled “Fear” or “Extreme Fear” for almost one month straight. The last time we saw such a prolonged fearful market sentiment was at the beginning of the summer when the market sentiment was fearful for more than two months straight. With the sustained consolidation of bitcoin, the late autumn euphoria has dampened, and the overall sentiment seems very negative at the moment.”
The report also says that, “during steady sell-offs, bitcoin tends to outperform the overall crypto market.” And this time was no exception, BTC “outperformed all indexes so far in December, seeing a negative return of -18% after a relatively flat second week of trading this month.” On the other hand, “the Small Cap index has seen a loss of nearly a third of its value in December.“ What does this mean in general?
“The bitcoin dominance has risen by 1.13% in the last week. This is the third time we’re seeing bitcoin dominance bottom at 40% in 2021. The last two times were May 19th and Sep 13th. It seems that the 40% threshold is a difficult area for alts to sustain”
BTC price chart for 12/15/2021 on Eightcap | Source: BTC/USD on TradingView.com
What Can We Expect In The Future?
To get our dose of technical and on-chain analysis, let’s give the mic to this month’s Fear & Greed Index Newsletter:
“A major factor here is the cycle support band. We cannot ignore the fact that Bitcoin had just closed 2 consecutive weeks below the market support band. Historically, this meant that we’d see a longer consolidation phase before we could have a true reversal in the trend. The takeaway here is this, as long as Bitcoin closes the week below the cycle support band, we shouldn’t expect any major breakout in price to take place.”
Every dog has its day, though. A week ago, analyzing a very similar market sentiment, NewsBTC informed you:
“A “Fear and Greed” Index on Extreme Fear levels, according to certain analysts, has historically preceded crypto market local bottoms. However, a run into new highs could see an obstacle as the macro-economic outlook turn complex.”
Related Reading | Bitcoin Price Bloodbath: Is El Salvador A “Sell The News” Event?
It’s also important to remember that only two months ago, we were in a similar situation and the sentiment did a complete 180 in a matter of weeks.
“The indicator dipped all the way down to extreme fear on 30th September, but in under two weeks the sentiment has already rebounded back to extreme greed. The report notes that this shows how fast the sentiment can change among the crypto market.”
With that being said, and a disclaimer that this isn’t financial advice, in a situation like this there’s only one thing we could say… hodl the line!
Featured Image: PublicDomainPictures on Pixabay| Charts by TradingView
Arcane Research predicts 700 million Lightning Network users by 2030
Arcane Research says that Lightning Network usage has been on a steep upwards trajectory since late last year, but in September growth went parabolic off the back of El Salvador’s Bitcoin adoption.
Chainalysis Report Reveals Crypto Has Gone “Global” In 2021
The blockchain is an immutable record. Companies like Chainalysis make a living out of interpreting that data, extracting value and insights from the numbers. And on-chain analysis reveals that crypto is now “a truly global phenomenon.” The data comes from Chainalysis’ 2021 Global Crypto Adoption Index. The people that really need crypto, qualified as “emerging markets” in the paper, are increasingly involved in the space.
Related Reading | Crypto Company Circle Seeks To Become Global Digital Currency Bank
In The Weekly Update, our friends at Arcane Research found this to be the headline:
“Chainalysis further ranked the countries with the highest crypto adoption following their methodology. A majority of the countries featuring at the top 20 list are emerging market economies.”
And clarifying their intention, Chainalysis’ paper itself starts with:
“While the professional and institutional markets are crucial, we want to highlight the countries with the greatest cryptocurrency adoption by ordinary people, and focus on use cases related to transactions and individual saving, rather than trading and speculation.”
That being said, we have to talk about…
BTC price chart on Bitstamp | Source: BTC/USD on TradingView.com
What Was Chainalysis ’ Methodology?
The company focused on “cryptocurrency adoption by ordinary people,” so they weighted everything by purchasing power parity per capita. They ranked “all 154 countries” according to three metrics:
- On-chain cryptocurrency value received, weighted by purchasing power parity (PPP) per capita.
- On-chain retail value transferred, weighted by PPP per capita.
- Peer-to-peer (P2P) exchange trade volume, weighted by PPP per capita and number of internet users.
It’s worth clarifying that in that third one, they “rely on data supplied by two of the largest P2P platforms operating — LocalBitcoins and Paxful — to calculate each country’s P2P trade volume.” Because, for the most part, P2P trading isn’t reflexed on-chain. Chainalysis admits that “While this means that we aren’t capturing all P2P value, we believe these two exchanges are popular enough for their metrics to act as an overall approximation.”
DeFi Is Not Part Of The Studio. DeFi Stats Coming Soon
It’s also worth noting that, “Transactions carried out by DeFi protocol users all show up on-chain, as no centralized service ever takes custody of users’ assets.” That presented a problem, because it “skewed” their rankings “toward countries with comparatively more DeFi users.” So, Chainalysis decided to leave DeFi stats out of this particular studio.
However, they promise. “We also decided to create a new DeFi Adoption Index, which will be available in the coming weeks.”
Global Crypto Adoption Index 2021 | Source: Arcane Research
Chainalysis Identified Three Key Trends
On-chain analysis reveals that:
- Global cryptocurrency adoption is skyrocketing
This might sound like an obvious claim, but the surprising thing is the staggering numbers.
“At the end of Q2 2020, following a period of little growth, total global adoption stood at 2.5 based on our summed up country index scores. At the end of Q2 2021, that total score stands at 24, suggesting that global adoption has grown by over 2300% since Q3 2019 and over 881% in the last year.”
- Adoption in emerging markets grows, powered by P2P platforms
Not everyone has access to a globally accepted bank account. The people who don’t have access to centralized exchanges found a way to participate in the crypto space. And are doing it in a major way.
- China and the U.S. dip in our rankings
Not surprisingly, “analysis shows how far P2P volumes have fallen in the two countries compared to worldwide volumes.” However, according to Chainalysis, further considerations indicate that:
“This activity may reflect increasing professionalization and institutionalization of cryptocurrency trading in the United States, and in China’s case may be related to ongoing government crackdowns on cryptocurrency trading.”
Why are Chinese people abandoning P2P trading so radically? Wouldn’t the “government crackdowns on cryptocurrency trading” cause a surge in old P2P trading instead?
Related Reading | Chainalysis: 2020 Is The Year of The Institutional Bitcoin Investor
In any case, Chainalysis concludes their study with:
“The clear takeaway though is this: Cryptocurrency adoption has skyrocketed in the last twelve months, and the variation in the countries contributing to that show that cryptocurrency is a truly global phenomenon.”
And we couldn’t agree more. It is.
Global Crypto Adoption Index | Source: Chainalysis
Featured Image by NASA on Unsplash – Charts by TradingView
Fear And Greed: Sentiment Turns Neutral As Bitcoin Stagnates, What To Do?
It’s the calm before the storm. What to do when the Fear and Greed index turns grey? Warren Buffett already told us to be greedy when others are fearful. We already know that we should be fearful when others are greedy. What should we do when the market it’s at a rare state of balance and expectations are high? We should probably take a page for those Bitcoin maximalists and… wait for it… HODL!
One of the main criticisms that the Fear and Greed Index gets is that it encourages traders and investors to try to time the market instead of holding strong. Bad things happen to those who try to time the market. Yet, we try to do it. The temptation is too strong. Bad things happen to those who trade emotionally. Yet, some fall for that trap over and over again. In fact, it could be argued that the Bitcoin and cryptocurrencies markets are even more emotional than the traditional ones. And that’s saying a lot.
In any case, before making any rash decisions, we should remember what we’re talking about here.
The Fear & Greed Index goes into neutral territory | Source: Arcane Research
What Exactly Is The Fear And Greed Index?
We at NewsBTC deal with this constantly. Even though the Fear and Greed Index is a criticized and questionable indicator, there’s an undeniable connection to the market that’s obvious even to the casual observer. When we found a bizarre correlation between the Fear & Greed Index and UTXO data, we prefaced it with:
“As a speculative asset, nothing else quite behaves like Bitcoin. Shifts in sentiment take price action to the extreme. As a result, tools have been developed to monitor the fear or greed in the market.”
The website Alternative.me calculates the main Fear And Greed Index for cryptocurrency markets, they explain its reason to be as:
The crypto market behaviour is very emotional. People tend to get greedy when the market is rising which results in FOMO (Fear of missing out). Also, people often sell their coins in irrational reaction of seeing red numbers. With our Fear and Greed Index, we try to save you from your own emotional overreactions. There are two simple assumptions:
-
Extreme fear can be a sign that investors are too worried. That could be a buying opportunity.
-
When Investors are getting too greedy, that means the market is due for a correction.
We, very simply, explained why when we described how the Fear And Greed Index can be used as a trigger indicator:
“Financial market sentiment can almost always be used as a contrarian indicator. But in a speculation driven industry where hype and buzz matter more than fundamentals, this is even more true.”
BTC price chart on Bitstamp | Source: BTC/USD on TradingView.com
What Does It Mean When The Sentiment Turns Neutral
After what seemed like years of coldness and extreme fear, the market sentiment started improving as early as a week ago. And, even though it doesn’t feel that way, this advance into neutral territory is a huge improvement. As Arcane Research said in their “The Weekly Update” report:
“The Fear & Greed Index has climbed rapidly since late July and touched neutral levels for the first time since May. Despite the slight decline in the last couple of days, the market is certainly getting more bullish. This bullishness is also evident in the futures market.”
So, what should you do now that the sentiment turned neutral? Not much. Keep your finger on the trigger, though. Things are about to get interesting.
Featured Image by Kristopher Roller on Unsplash – Charts by TradingView
Bitcoin Short Squeeze Revives Trading Volume And Volatility
After what seems like a thousand years of stability and a slight downtrend, bitcoin is back. Volatility is wreaking havoc. Trading volume seems to be picking up steam. And, more importantly, the community’s morale is climbing up. In any case, what do the data and the on-chain analysis say? Are the numbers high enough to justify the excitement? Let’s explore them.
BTC price chart for 07/27/2021 on Bitstamp | Source: BTC/USD on TradingView.com
Trading Volume Is Climbing, But, Is It A Trend?
According to Arcane Research, “On Monday, the daily trading volume in bitcoin reached $9.2 billion, which is the highest daily trading volume in bitcoin recorded since June 22nd.” That could be a good sign of a healthy market making a recovery, but hold your horses. The market had been stagnant for a while, and not only that, before the spike we had “Four consecutive days bellow $3 billion.”
Related Reading | Bitcoin Trading Volume Plunges To Lowest Level Since 2020
Even though $9.2M is a promising number, take into account that “Overall, the 7-day average trading volume remains substantially below its yearly average and trading activity in bitcoin seems to be low so far this summer.” From where we stand, there’s no way of knowing if the market is picking up or if we are witnessing a statistic anomaly. We’ll have to wait and see.
BTC Daily Volume is rising | Source: Arcane Research
Volatility Is Back In Action, But, Is It Here To Stay?
Even though traditional finance is afraid of it, the Bitcoin community thrives on volatility. And, again according to Arcane Research, “Yesterday, the markets moved towards the upside, leading the 7-day volatility to climb above the 30-day volatility.” So, volatility is back, but, are we off to the races? Don’t be so sure.
“Last summer, a similar event occurred when bitcoin was consolidating throughout the summer on declining volatility, before seeing a sudden 11% gain on July 27th, 2020. Then, the market corrected back toward the lower end of the consolidation range quickly thereafter and remained within its consolidation range throughout the summer.”
Are we in the same cycle, though? So far, 2021 has been insane for Bitcoin. All the predictions fell through. All the models seem to be failing. And there’s hope. The bull run might be over, but it also might not. And if we are still in the bull run, there’s no point comparing the situation to last summer. We might be in a whole different ball game.
BTC/ USD Volatility is wreaking havoc | Source: Arcane Research
The Short Squeeze That Generated This
Everything happened “On Monday, $750 million worth of shorts got liquidated, as bitcoin climbed from $34000 to $39500. This is the largest short squeeze we’ve recorded in bitcoin, surpassing the squeeze amid bitcoin breaking its 2017 ATH on December 16th-17th.” That catastrophic event shifted Bitcoin’s tectonic plates and put volatility, trading volume, and everything in motion. How long will it last, though? That’s the question.
Related Reading | $150 Million In Short Squeeze Liquidated As Bitcoin Scales Above $53,000
About the short squeeze is worth noting that “Binance changed their API following the May 19th crash,” so the numbers might not be precise. In fact, according to Arcane Research, the situation might’ve been “severely underestimated by Bybt. This short squeeze was, therefore, very likely far larger than $750 million.”
Featured Image by Steve Buissinne from Pixabay - Charts by TradingView
CBECI Report: China’s Hold Over Bitcoin Mining Was Waning Before The Crackdown
Shocker! According to the latest CBECI update, China’s control over Bitcoin mining was already waning. The Cambridge Bitcoin Electricity Consumption Index shows that and much more, it “provides an up-to-date estimate of the Bitcoin network’s daily electricity load.” However, China is the headline. The government’s recent ban on Bitcoin mining left the world speechless, and this feels like another piece to solve that puzzle.
It doesn’t quite fit, though. According to Arcane Research, CBECI numbers say that:
China’s share of total Bitcoin mining power has declined from 75.5% in September 2019 to 46% in April 2021 — before the restrictions on Chinese miners were even imposed. That figure is much lower than the older estimate of 65%.
Related Reading | Why China’s Crackdown On Bitcoin May Be Just Beginning
That’s a sharp decline. Why did China’s miners lose so much ground before the ban? Did the Chinese government turn off the machines that they reportedly own? Why would they do that? Is everyone missing an obvious explanation for all of this? It’s also very interesting that the CBECI shows that the United States and Kazakhstan were growing at a tremendous rate before the ban.
BTC price chart on Bitstamp | Source: BTC/USD on TradingView.com
Bitcoin Mining In The United States And Kazakhstan
Arcane Research crunched the numbers, and apparently:
Over the same period, the United States’ share of total Bitcoin hashrate increased from 4.1% to 16.8%, making it the second-largest Bitcoin mining location.
Following behind is Kazakhstan, with an almost six-fold increase of hashrate share — from a mere 1.4% in September 2019 to 8.2% in April 2021.
That ‘s curious. After the government ban came into effect and the miners turned off their machines, we worried about the Bitcoin hash rate going into a death spiral. The great miner’s migration was on its way, and guess who were the forecasted big winners:
Tons and tons of mining equipment are currently traveling to their new homes. There are reports of a huge operation in Kazhakstan, a neighboring nation of China. There are also rumors of equipment and personnel already settling down in Texas. The US state is making a push to become a Bitcoin mining capital, and apparently, the efforts already bore fruit.
Remember, though, everything the CBECI numbers show happened before the ban.
Is there something we’re missing?
Country share of global Bitcoin hash rate | Source: Arcane Research
How Do They Get The CBECI Numbers?
The Cambridge Bitcoin Electricity Consumption Index explains the methodology they use:
The underlying techno-economic model is based on a bottom-up approach initially developed by Marc Bevand in 2017 that uses the profitability threshold of different types of mining equipment as the starting point.
Given that the exact electricity consumption cannot be determined, the CBECI provides a hypothetical range consisting of a hypothetical lower bound (floor) and a hypothetical upper bound (ceiling) estimate. Within the boundaries of this range, a best-guess estimate is calculated to provide a more realistic figure that approximates Bitcoin’s real electricity consumption.
So, it’s a very elaborate educated guess. However, it’s based on real data and a range of estimations. Does it tell us anything about the curious results they got? Is the data telling a story that we’re missing?
Related Reading | How China Bitcoin FUD Is Lowering The Cost To Produce BTC
Last month, we posed a theory about the Chinese government trying to get rid of small hydroelectric plants. The whole situation is perplexing, so, we asked the following questions:
It’s possible that the government is trying to get rid of those plants. That would explain the article’s tone, it seems like it was trying to get investors to stay away from those hydropower stations. In light of this, China’s ban on Bitcoin mining could just be part of an even bigger play. They’re serious and methodically shaking things up over there.
What could be their end-game? Is China just trying to go carbon neutral and repair the original flow of the rivers? Or is there something else at play here?
Everything the CBECI shows seems to relate to the answer to all of these questions. However, there’s at least one piece missing. The mystery persists.
Featured Image by Tuna Ölger from Pixabay - Charts by TradingView
