Category: BTC

Bitcoin is holding well above the critical support at $47,000. Trading at $50.067 with 1.6% in the 1-hour chart and sideways movement in the 24-hour chart, BTC seems to be on a path to recovery on the lower timeframes. As many in the crypto space have said, this bull-run will be defined by its quick bounce backs and consolidations periods.

Trader Josh Rager compared BTC’s past price action with the current price performance. For Rager is a normal part of a bull-run for BTC to trend below its 100 days Exponential Moving Average (EMA). During 2017, the cryptocurrency saw at least 3 drops below this metric.

The trader believes investors should be “concerned” if the price breaks below its 200D EMA. In contrast, BTC never trends below this metric while on bullish price action.

During the weekend, the trader expects a bounce if BTC drops to the mid-$40,000. Currently, the 10W EMA is converging with the weekly support level, as Rager explained. This could serve as a good entry point for a long position in both BTC and altcoins, as the trader said:

The bottom could be in, but if Bitcoin bounces and then goes down to lower $40ks. Would love to buy in that area both $BTC and alts. As long as price holds there we could see some major rallies over the next few months as BTC slowly uptrends.

In the meantime, some side movement could be Bitcoin’s new normal for the short term. Lex Moskovski, CIO at Moskovski Capital, believes the recent crash “cooled off” BTC’s major overheating indicators.

As seen below, Moskovski compares 2017 bull run metrics with the current market and determined that Bitcoin is around 44% from potentially reaching a peak on its upside trend. On the contrary, there could be even more upside momentum after this week’s crash. Moskovski said:

Bitcoin has cooled off a bit and according to the major overheating indicators has even more upside now.

What Could Break Bitcoin’s Market Structure?

Economist and trader Alex Krüger provided further arguments for a long-term BTC bullish case. As Krüger said, this cryptocurrency has seen massive adoption with macro-economic conditions that benefit it. Since 2020, the thesis of Bitcoin as a store of value has gained a lot of strength among institutional investors.

Krüger laid out two possible scenarios. In one, “major catalysts” re-heat the market, and BTC’s price pushes into a new discovery period. The economist said:

The first half of this dump was expected, not so the second, which was news-driven. Shit happens. But nothing major has changed aside of a healthy cleansing. When expecting a range good to avoid getting bullish on breakouts, or risk getting head chopped off.

In the second scenario, the U.S. Government and its Secretary of Treasury Janet Yellen launch new regulations for crypto and digital assets. Krüger expects any “draconian” rules to negatively impact the market.

Bears wreak havoc in the crypto market and major coins bleed out in the lower and higher timeframes. Bitcoin (BTC) is on a downtrend with a 9% correction over the past day and 20.9% in the 7-day chart. With a market cap below $1 trillion for the first since February, the price action seems to favor the pessimists.

However, analyst William Clemente has pointed towards the current funding rate for BTC futures across all exchanges. At the time of writing, this metrics stands at 0.03%. As the chart below shows, every time BTC’s futures funding rate reached these levels, the price was able to gain momentum and run hot towards new highs. The analyst said:

Some Silver Lining: Greed has been flushed out of the bitcoin market. These resets in funding rates have been a good gauge of market sentiment. Usually when the market is the most hesitant to go long is the best time to go long in bull markets. We are very close to a bottom.

A high number of leverage positions and its subsequent liquidation during last week is one of the reasons for BTC’s price action. However, in the past months, Bitcoin has been forming a pattern. As Clemente also pointed out, the cryptocurrency trends downwards towards the end of the month only to resume its rally.

Two other metrics indicate possible appreciation in BTC’s price. First, the Spent Output Profit Ratio (SOPR), metric used to measure Bitcoin holders’ profits and losses. Now, as Clemente said and shows in the chart below, the SPOR is approaching its reset mark close to 1.

As the bull market extends and retail investors take action, it becomes more likely for BTC’s SOPR to drop below 1 and offer “great buy opportunities”. Clemente said:

Currently, SOPR is approaching the full reset mark, meaning price has either reached, or is very closing to reaching, the bottom of the current correction.

But perhaps, the most bullish metric is Bitcoin miner’s Net Position Change, a metric used to measure the amount of buying and selling pressure for this sector. Since the start of April, miners have stopped selling their supply and have begun on an accumulation trend. Much different than the 2016 and 2017 bull market, as the analyst said:

Throughout the 2016/2017 bull market, miners consistently sold. This is a key differentiating factor between that cycle and the current one, possibly made possible by newly matured Bitcoin borrowing/lending platforms.

Bitcoin Bears Could Continue Their Assault

On the other hand, trader Bob Loukas claims yesterday’s crypto crash has been the first since March 2020, when the “Black Thursday” took BTC below $4,000. Therefore, he believes something has been broken in the market’s structure ending the rally that took Bitcoin to the current levels.

In the short and medium-term, investors should take gains and rotate their position for maximum profit, according to Loukas. The next phase could be comprised of consolidation and lower levels in May. However, the trader highlighted that everything remains as a possibility and not a prediction, he added the following:

For those worried about an end to the bull market already, I say, VERY MUCH doubt that.  This bull market has been coming light a freight train and I’ve yet to see anything close to resembling the type of high (top) you expect before a crash.

Much has been said lately about Bitcoin’s impact on the environment. Mainstream media has been especially keen on declaring BTC’s consensus mechanism (Proof-of-Work) a potential danger for the future of the planet.

A White paper published by Square and ARK Invest, as part of “The Bitcoin Clean Energy Initiative”, makes the opposite case and argues Bitcoin is in fact a “key driver of renewable energy’s future”. The research paper claims Bitcoin mining along with renewable energy to facilitate an “energy transition”.

Thus, energy asset owners could become the “bitcoin miners of tomorrow” operating a resilient electricity grid. BTC miners have certain characteristics which can sustain this new energy model. First, miners are geographically agnostics, with a “flexible and easily interruptible load”, as the White paper claims.

As such, they are “unique energy buyers” appropriate to face the clean energy sector’s main challenges: low production when demand rises and intermittency. The research claims the following:

Bitcoin miners, on the other hand, are an ideal complementary technology for renewables and storage. Combining generation with both storage and miners presents a better overall value proposition than building generation and storage alone.

Bitcoin Leverage The Cleanest And Cheapest Form Of Energy

The Levelized Cost of Energy (LCOE), metric use to measure how expensive is to produce a type of energy, for solar and wind have seen a decline in the past ten years. The White paper claims solar energy cost has fallen by 90% and wind by 71%. Therefore, the cost without external factors (like subsidies) sits at about 3 to 4 cents per KWh and 2 to 5 cents per KWh, respectively.

In contrast, the same metric (LCOE) for fossil energy stands at 5 to 7 cents per KWh for coal and natural gas. The research adds:

(…) solar and wind are now the lowest cost and most scalable. What’s more, we believe they will only continue to get more affordable over time.

Bitcoin mining can be a “complementary” technology that leverages these cleaner and cheapest energy sources. The combination of the above with methods to store energy can lead to, according to the White paper, a migration of clean energy projects into “profitable territory” with benefits for investors.

Also, more flexibility to construct solar and wind projects. Sustainable with BTC mining, they can explore their integration with the main energy grid when “interconnection studies are completed”. Such energy sources can be resilient in “black swan events” providing the energy grid with “readily available excess”.

The miners can absorb this “excess” energy due to their “unlimited appetite” while a Lithium-Ion based storage, for example, can hold its capacity to meet the consumer’s demand during the day. In the long term, the White paper predicts a scenario where there will be a bigger need for electrical supply with the growth of electric vehicle use.

The model presented by Square and ARK Invest could boost the deployment of solar and wind energy sources. At the same time, turning the BTC mining industry into a much “sizable” and greener sector. Without the miners, the research estimates only 40% of grid power before prices must be increased to meet demand. The opposite case is more profitable and sustainable:

With bitcoin mining integrated into a solar system however, energy providers – whether utilities or independent entities – would have the ability to play the arbitrage between electricity prices and bitcoin prices, as well as potentially sell the “surplus” solar and supply almost all grid power demands without lowering profitability.

BTC is trading at $55.394,97 with a 1.8% loss in the daily chart. In the weekly and monthly chart, BTC has a 12.9% and 3.8% loss, respectively. The market cap stands at $1.3 Trillion.