Welcome to the 48th issue of the Broker’s Beat. This week, we look at both the reasons that led to panic in crypto and why we think things are not as bad as they seem.
BY THE NUMBERS
SNIPPETS
A “sustainable” bitcoin firm has raised money to mine crypto by burning waste coal
Source: Quartz
“Stronghold Digital Mining, a new, “ESG-friendly” bitcoin-mining firm, uses the electricity from the Scrubgrass Generating Plant in Kennerdell, Pennsylvania, to power its operations.”
Idle Mining Farms Outside China Can Only Cover 5%-10% Of Mining Needs
Source: U.Today
“Mining farms outside of China can cover no more than 5-10% of the capacity of companies that are rapidly exporting their mining equipment outside of mainland China, considers the Chinese cryptocurrency journalist Colin Wu.”
Rig maker Bitmain offers help to Chinese miners looking to relocate abroad
Source: The Forkast
“Chinese mining rig maker Bitmain is offering assistance to clients that want to relocate their cryptocurrency mining operations from China to other countries, according to a statement.”
Bitmain reportedly suspends Bitcoin miner orders amid booming secondhand supply
Source: CoinTelegraph
“By postponing the sales, Bitmain aims to help miners exiting the industry get better prices for mining equipment.”
Iranian Police Seize 7,000 Mining Rigs In Latest Raid
Source: BeInCrypto
“On Tuesday, authorities conducted their largest raid to curb nationwide mining. The confiscated computers were found in an abandoned factory outside the Iranian capital of Tehran.”
THE BITCOIN BEAT
BTC/USD
A snapshot of Bitcoin’s spot price as of this writing is $33,960.63 representing a 39.76% decrease in trading volume since June 23rd at 10:01 am. Bitcoin remains the top cryptocurrency trading with a circulating supply of 18,741,750 BTC, an increase of 563 overnight. The 30-day volatility of BTC is 77.47%, a 1 bps increase since last night.
ETH/USD
ETH is trading at $1,964.79 as of this writing, representing a 7-day decline of 17.15%, and 30-day volatility of 88.57%. Over the last 24 Hours, the trading volume increased by 36.57%. As of today, ETH holds 16.77% of the cryptocurrency market, making it the second-largest coin traded. It has a circulating supply of 116,421,227 coins, an increase of 12,356 since Tuesday.
INFLOW/OUTFLOW MONITOR
Finally, we saw a breakout towards the downside compared to last week’s consolidation for BTC. On the Inflow chart, we see a great representation of traders’ behaviors. June 17, 2021, at a spot price of 38.09k for BTC, there was a total inflow of 41.93k BTC into all exchanges.
Sentiments moved bearish on June 22, 2021, as BTC dipped to the 28-31k range (about -13% 24-hour change) and there was a total inflow of 59.99k BTC. This indicates that the china FUD on banning bitcoin mining mostly had a great effect on the new traders and made them panic sell.
However, do not be tricked. The long-term traders were not moved by the brief dip and used this opportunity to accumulate more bags.
This is evident by the outflow chart which shows an increase in total BTC outflow from 42.86k on June 17, 2021, to 62.85k on June 22, 2021. This gives a negative netflow and proves that there is still a desire to HODL long-term.
HASHRATE ANALYSIS
The China Bitcoin crackdown intensifies even more during mid-week and this has caused the hashrate to plummet even further into 110.55 million terahashes per second (as of June 23, 2021).
Since China shut down mining facilities in the major mining provinces/regions, miners have been flown into other countries, including Maryland, USA.
Some traders have tagged this “The ultimate gift to the US”, coming at a time when there is a global push for a clean energy mining solution. Mining factories can now be set up in these areas that provide more renewable energy for mining BTC.
This will be great for Bitcoin because we expect Tesla to announce that they’re accepting Bitcoin payments again, as they previously stated that they will do this once miners start to use 50% clean energy. It is very possible that this happens by the end of 2021 and we see a hash rate rally into new ATHs.
TRADER’S DIGEST
There’s a lot of panic in the crypto space right now, primarily due to two major reasons:
- The Death Cross
- China FUD
Since the death cross occurred on the BTC/USDT chart earlier this week, there has been a sharp downtrend. Traders have taken this lagging technical indicator signal to mean that it’s the start of a bear market. The ban on Bitcoin mining in China also adds to the fear within the crypto space as we discussed above.
However, looking on the brighter side, we have more reasons to believe that the best is yet to come during this bull market and we still have a long way to go before it peaks out.
Firstly, since the recent drop below the $30k mark, BTC has seen a rapid surge upwards as much as +18%. This formed a green hammer candlestick pattern on the BTC/USDT chart, which is a bullish signal that we may see an uptrend going forward. Many people believe that we are currently trading sideways in the Wyckoff accumulation phase and will soon experience a breakout.
Second, big institutions such as Microstrategy haven’t backed down on filling their bags as they continue to accumulate more Bitcoin. The CEO, Michael Saylor, announced that Microstrategy bought an additional 13,005 BTC on June 21, 2021, to make a total of 105,085 BTC ($2.741 billion) that the company now owns.
Third, the author of the bestselling novel Rich Dad, Poor Dad, Robert Kiyosaki, shared his thoughts on why this is the best time to buy and hold Bitcoin:
“…waiting for Bitcoin to drop to $24 k. Crashes [are the] best time to get rich…”
Lastly, whether we like it or not, inflation is kicking in already. This makes the purchasing power of the US dollars less and less significant. Over time, it will cost more US dollars to purchase the same amount of cryptocurrency as you would today.
That’s all for this week! If you have any questions about what we talked about here or would like to explore trading with us, please reach out here.
Happy trading!
The Secure Digital Markets Team
