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.

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.

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Source: Mempool Space

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.

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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BTC moving sideways in the daily chart. Source: BTCUSD Tradingview

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.

Related Reading | Could The Golden Ratio Provide Clues To The Bitcoin Bottom?

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 bollinger bands

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.

Related Reading | How Extreme Fear In Crypto Correlates With Bitcoin Bottoms

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

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.

Related Reading | Bitcoin Flash Crash Pauses As Goldman Sachs Announces Crypto Services

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

Related Reading | Goldman Sachs Files For An ETF With Option To Invest In Bitcoin

Featured image from Pixabay, Charts from TradingView.com

Bitcoin Mining Council: We Need To Tackle Negative Media Narratives

The Bitcoin Mining Council has publicized its aim to tackle negative media narratives.

In its inaugural meeting which was hosted on Twitter Spaces, the council discussed bad press that has been surrounding Bitcoin and its mining in the past weeks. The China crackdown has led to the shut down of a number of mining farms. Mining has been restricted in regions like Inner Mongolia and miners are having to look for new places to set up operations in the meantime.

Concerns over energy consumption and pollution from mining activities have been rocking the space for a while. People have called for there to be more options for green and efficient Bitcoin mining. Movement from fossil fuel energy to more sustainable energy like hydropower for mining activities have been strongly encouraged.

Related Reading | MicroStrategy Sells $500 Million Notes To Buy Bitcoin

In light of these issues, Michael Saylor, CEO of MicroStrategy, formed the council with other prominent members in the space.

Bitcoin Mining Council Mandate

Saylor had created the council in response to ongoing debates about Tesla accepting Bitcoin payments. The debates were mostly about if Tesla had examined the energy expenditures involved with Bitcoin mining before making such a move.

With prominent founders such as Galaxy, Riot, MicroStrategy, and a host of others, a lot of attention was on the first BMC meeting to see what the outcome would be.

The council which was announced about a month ago held its first official meeting on Twitter yesterday. The meeting was open to the public and anyone could join in. With over 7,000 listeners in attendance, the council went on to outline the council’s objectives.

Bitcoin price chart

Bitcoin price chart | Source: BTCUSD on TradingView.com

The Bitcoin Mining Council (BMC) stated that its purpose is not to be a regulating body of any kind. They are not here to tell anybody what to do. It is to be a forum that is open to all miners. There is no fee required to join. The members just have to agree to be transparent about their energy mix and hash rate sizes for research and educational purposes.

Its mandate is to promote transparency, share best practices, and educate the public on the benefits of Bitcoin and Bitcoin mining, according to the website.

Curbing Negative Media Narratives

Talking about the negative press that has been surrounding mining, the members focused on getting ahead of the media.

There were also issues regarding whether public companies involvement would be good or bad for mining. Not wanting smaller operations to get swallowed up by bigger ones and discouraging people from getting into it.

CEO Michael Saylor was less concerned about board members or activists pressures. Highlighting that he was more worried about negative media narratives around Bitcoin mining might influence political decisions. This, he believes, would create real barriers to entry in some jurisdictions

Related Reading | Billionaire Tim Draper: Bitcoin Will Reach $250,000 By The End Of 2022

Saylor is quoted saying, “You could be a maximalist and say I’m against organization as a matter of philosophy, but if you get sued by a multibillionaire that wants to sue an individual Bitcoin developer and you get buried in $10 million in legal fees, you’ll be wishing that there was an organized legal defense fund for you. Basically, we can’t expect to succeed if we’re disorganized.”

This raised major points as to why the council is needed. It could act a form of protection for smaller miners. Having basically a coalition behind them should any issues arise that they are too small to handle or ill-prepared for.

According to Saylor, the BMC is not here to fix Bitcoin. It’s simply here to protect it from the people who misunderstand it. The BMC wants to help keep the negative narratives from influencing political decisions against Bitcoin.

Featured image from Bitcoin Mining Council, chart from TradingView.com

Pantera Capital CEO: Bitcoin Has Only Been This “Cheap” 20% Of The Last 11 Years

The best time to buy Bitcoin was a few years and when it first came around in the early 2010’s. The next best time to buy BTC? Right now according to Pantera Capital CEO Dan Morehead.

In a tweet sent out recently, Morehead laid out the facts for why the the market is below trend, making now one of the best times to buy.

Bitcoin Below Market Trend?

What Morehead explains about the price of Bitcoin is clear to see. Right now, Bitcoin is trading at 36% below its 11 year exponential trend. So, relative to this trend, or the overall direction of market price, it has only been this “cheap” to buy and under the trend for a little over 20% of the last decade plus.

This means that typically, people pay more for BTC relative to what they should have paid based on price movement. For those looking to buy bitcoin at a potential discount, now may be that time since Bitcoin is not normally under the trend in this way.

Although Bitcoin is trading at a lower price after the downturn in recent weeks, that doesn’t mean the market isn’t poised for a rebound. Investors should be bullish that the cryptocurrency is currently cheap relative to the trend. This along with the fact that it’s year over year return is up 281% shows that there should be no worry from crypto investors and those holding any digital assets.

Related Reading | BTC Extends Losses, Why $30K Holds The Key For Next Wave

Pantera Capital is the first U.S based institutional asset manager focused completely on blockchain technology. Since their first fund in 2013, they have continually been on the cutting edge of funding blockchain businesses, and investing in digital assets.

In Pantera Capital’s blockchain letter from 6/14/2021, they further clarify the reasons why holders should not worry about the recent losses:

It has averaged more than tripling annually for ten years. Anyone that has held bitcoin for 3.25 years has made money. Bitcoin has only printed one calendar year with a lower low. So, most of those investors are up big-time.  

Related Reading | BTC Dips From $40K, Here’s Why Uptrend Is Still Intact In BTC

Why Is The Crypto Market Below Trend?

Many factors play into the reasons that the crypto market is below trend right now. But the biggest comes from the large dip crypto prices took a few weeks ago. With that drop, many investors were scared into liquidation and fears that the market could completely bottom out. The prevailing side effect, Bitcoin trades at a lower price relative to it’s decades long trend.

If you were thinking about dipping your toe into the cryptocurrency market, there is no better time like today to get a good deal on the price of Bitcoin relative to its history.

Feature photo by Chronis Yan on Unsplash

Why China’s Crackdown On Bitcoin May Be Just Beginning

Bitcoin mining activities might be coming to an end as the industry is used to knowing them. The Asian giant has decided to step up its regulations on this sector; many miners have decided to migrate to friendlier countries.

Investment firm Sino Global Capital stated via Twitter that China could be increasing its interventions in its markets. Thus, they have taken stricter control measures to “protect investors”. As a consequence, the Bitcoin and crypto industry in China is “showing sings of cooling down”.

China seems to have two targets in the crypto industry BTC mining and leverage trading. Sino Global Capital sees Chinese regulators making these items a priority in the short term. The firm’s report claims:

To prevent scammers from making a comeback and intentionally manipulating the market, there is still a high probability that there will be more supervision rules implemented one by one.

Usually regarded as FUD (Fear, uncertainty and doubt), this time China’s measure against Bitcoin seem to be materializing. The industry’s balance, at least in the mining sector, could shift. This sector could completely migrate west.

In the U.S., cities such as Miami and Texas could welcome the Bitcoin mining operations. Francis Suarez, Miami’s Mayor, seems to be in negotiation with some miners. The city has nuclear power as part of its electricity grid and could offer attractive rates. Suárez said:

Bitcoin miners want to get to a certain kilowatt price per hour, and we’re working with them on that.

China Targets Bitcoin Trades With Leverage

Bitcoin-based derivatives traders that use leverage could see the worst take. Sino Global Capital records report from people that have “received calls from the police”. The local authorities apparently are inquiring about the citizens crypto related activities.

Exchange platforms might take measures to avoid the authority’s scrutiny. Huobi, one of China’s main exchange, will reduce its leverage offer from 125x to 5x, according to Sino Global Capital. For its newest customers, the measures is even harder, they won’t be able to use any leverage.

As predictable, China as target different sectors and markets, including TradFi. The report indicates that two major securities exchanges, FUTU and Tiger, won’t continue to provide Bitcoin related data.

Both confirmed that their latest App releases have suspended CME BTC market information and trading functions. FUTU’s customer service said that in response to regulatory requirements, the provision of market information and transactions have been suspended.

The investment firm believes the Chinese government finds “speculative” Bitcoin trading as a threat to the nation’s economic and financial stability. Thus, they have adopted these measures.  Sino Capital concludes that there is growing trend of introducing more crypto regulations.

Global crypto policies are tightening: The Basel Committee on Banking Supervision has demanded that cryptocurrencies carry the toughest bank capital rules of any asset, according to Financial Times.

At the time of writing, BTC trades at $36,463 and trending downwards in the daily chart. The first cryptocurrency by market cap seems to be reacting to a dropped in the stock market. BTC must hold the line at current levels, or it risk going further down in the short term.

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BTC on a downtrend in the daily chart. Source: BTCUSD Tradingview

TA: Bitcoin Trims Gains, What Could Trigger Fresh Drop To $35K

Bitcoin price started a fresh decline after it failed to stay above $40,000 against the US Dollar. BTC is moving lower and it could even decline towards $35,000 in the near term.

  • Bitcoin started a fresh decline from well above the $40,000 pivot level.
  • The price is now trading well below $39,000 and the 100 hourly simple moving average.
  • There is a major bearish trend line forming with resistance near $38,500 on the hourly chart of the BTC/USD pair (data feed from Kraken).
  • The pair is likely to continue lower if it fails to stay above the $37,200 support zone.

Bitcoin Price Extends Decline

Bitcoin failed to stay above the key $40,000 support zone and started a fresh decline. BTC broke the $39,500 and $38,500 support levels to move into a short-term bearish zone.

The price traded below the 50% Fib retracement level of the upward move from the $34,822 swing low to $41,380 swing high. It is now trading well below $39,000 and the 100 hourly simple moving average. There is also a major bearish trend line forming with resistance near $38,500 on the hourly chart of the BTC/USD pair.

An immediate support on the downside is near the $37,200 level. It is near the 61.8% Fib retracement level of the upward move from the $34,822 swing low to $41,380 swing high.

Bitcoin Price

Source: BTCUSD on TradingView.com

If there is a downside break below the $37,200 support, the price may even struggle to stay above the $36,500 support. Any more losses could open the doors for a move towards the $35,000 support zone in the near term.

Fresh Increase in BTC?

If bitcoin stays above the $37,200 support, it could start a fresh increase. An initial resistance on the upside is near the $38,200 level.

The first major resistance is near the $38,500 level and the bearish trend line. A successful break above the trend line could lead the price towards the $39,500 resistance zone and the 100 hourly SMA. A close above the 100 hourly SMA is must for a fresh increase above the $40,000 resistance zone in the coming sessions.

Technical indicators:

Hourly MACD – The MACD is slowly moving into the bearish zone.

Hourly RSI (Relative Strength Index) – The RSI for BTC/USD is now well below the 50 level.

Major Support Levels – $37,200, followed by $36,500.

Major Resistance Levels – $38,200, $38,500 and $40,000.