Welcome to the 26th issue of the Broker’s Beat. This week, we’re in the first time where the crypto markets look normal and equities markets have gone off the lid with the Wall Street Bets scandal.
“Bitmain — one of the major Bitcoin miner makers — has seen its inventory sold out until August 2021, according to information on its website. Apart from being out of stock, Bitmain’s mining rigs are now at a massive price premium.”
“Publicly traded cryptocurrency mining company Hive Blockchain (HIVE) announced its purchase of 6,400 bitcoin mining machines from Canaan (CAN), a move that will push the company’s total hash power past its year-end goal of 1,000 PH/s.”
“If you are a cryptocurrency and blockchain industry professional, the most commonly heard term would be computing power or hash rate, which is a quantitative measure of the computing speed of a mining machine. A new contender has entered the cryptocurrency mining scene – hash rate tokens.”
“A global chip shortage is choking the production of machines used to “mine” bitcoin, a sector dominated by China, sending prices of the computer equipment soaring as a surge in the cryptocurrency drives demand.”
“It is hard not to notice how Covid-19 has affected the business world and crypto. It is foolish to think that it hasn’t affected marketing trends. The pandemic has altered the way we all think, behave and even our habits.”
The price of Bitcoin has been in a decline from the 25th of January when it came up to $34,891. As it came down to $29,164 at its lowest this was a decrease of 16.27%. Since then it has made a recovery above the $30,655 level but is not yet again back on the levels of today’s low.
Looking at the hourly chart, we can see that the price made a corrective increase prior to this descending move to the 0.382 Fibonacci level which was the completion of the second wave X. This means that the price is now headed towards a lower low compared to the one made on 22nd of January.
This lower low would be the development of the 5th corrective wave Z from the complex count. As we have seen the formation of the descending triangle from its all-time high the price today made interaction with its support level and has bounced from it, but a breakout to the downside would be expected.
The target price for the expected decrease could be significantly lower, to the vicinity of the $24,000 zone, which would be a decrease of 31% measured from the prior recovery high at the 0.382 Fib level. Potentially we could see the current bounce leading the price towards another minor recovery, but that wouldn’t be expected to last for long.
More likely the price is now going to further test the triangle’s support before it breaks it and continues moving impulsively to the downside.
Bitcoin mining revenues are at historic highs right now, and we’re seeing lots of mining deals occur because of it.
Last week, we saw Canadian mining group, Hut 8, finalize a deal to borrow $11.8 million that would be going towards the purchase of more mining units.
We’ll discuss the F2Pool dump of Bitcoin in a later section today, but another trend to keep an eye out for is the dearth of mining chips.
According to Chinese mining executives, there has been a massive spike in the demand for chips out of North America, and it is changing the whole market.
Prices are doubling for new rigs and going up by 50% for second-hand ones, which leads us to think that this trend is about to get very interesting (and out of control). Part of this can be attributed to the rising price of Bitcoin and the other part should be chalked up to investors suddenly being more comfortable with BTC in North America.
All in all, this is a good thing for the geographical diversification of the network
The hash rate has been in a decline as well, coming from 146.699M on January 25th to 146.182M where it’s currently sitting.
On the chart above, we can see that this is a continuation of the decline that started on the 17th of January when the valuation of the total number of terahashes per second made an all-time high of 155.146M.
In the upcoming period, we are most likely going to see further depreciation of this valuation as it entered the territory below the prior all-time high which could indicate that the hash power isn’t going to be present in that amount.
The valuation of the miner’s revenue has been on the rise from the 24th of January when it came down to 30.285M. Currently, it is sitting on 35.21M which is above the prior high made on the 23rd, and is still looking like it’s moving to the upside.
From its high, at 45.226M this valuation was moving to the downside in what appears to be a descending channel. Now as it made a higher high it could serve as an early indication that this trend is going to shift to a bullish one, however, it is still around the levels of its resistance.
In the upcoming period, we are going to see if a breakout is going to be made which will propel the valuation into upside trajectory, or are these levels going to result in rejection, pushing it further down.
So the big trend right now is a decreasing level of liquidity.
Last week, we saw the largest depletion of liquidity in years as funds either moved off-exchange, or to wallets that were more likely to be HODLers. Glassnode shows that 270,000 BTC moved to HODLer wallets in the last 30 days, which is a huge bullish signal for Bitcoin.
Then you have supply and demand dynamics, which also seem to be pointing bullish right now.
Just last week, 25,000 BTC was bought by Grayscale. That amounts to almost 7x the amount of BTC mined in an average week, and says a lot about the supply crunch we are potentially heading into.
On the flip side, last Friday the F2Pool dumped a ton of Bitcoin and created a supply glut that the market wasn’t ready for. As a result, the price of BTC dropped about 20%. Profit-taking is common, especially when miners want to cover operational expenses, but it isn’t yet clear what caused F2Pool to start this miner rush to sell BTC.
All this is to say that the dynamics are rapidly shifting, we’re seeing some dips below $30k, but the long-term trends seem positive, even if in the short-term, there are headwinds and speedbumps.
Next week, we have some research reports coming out on Machine Learning and Lending. However, if you’re only on the Broker’s Beat list, you won’t receive this. To opt-in for reports like this to be sent right to your inbox, subscribe here!