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  • Bitcoin surges above $30,100: here are the driving factors

    Bitcoin surges above $30,100: here are the driving factors

    • It is the first time the Bitcoin price is above $30,000 since June last year.
    • The surge comes after a one-month consolidation around $28K.
    • Analysts had set a support level at $25,000 and a resistance level at $30,000.

    Bitcoin price surged above $30,100 early Monday and has been above that level for the better part of the morning. It hit a daily high of $30,160.48 but was trading at $30,126 at press time.

    It is the first time since June 2022 that Bitcoin has hit $30,000, thus cementing the Bull Run that the cryptocurrency started at the beginning of the year.

    What pushed Bitcoin price above $30,000

    The BTC price has surged by more than 46% over the last few months rising to a ten-month level.

    Several analysts had predicted that Bitcoin would regain its $30,000 price tag as traders wait for the United States Consumer Price Index (CPI) report on April 12. The CPI is expected to give insight into the Federal Reserve’s battle against inflation.

    The Crypto Fear and Greed Index has remained within the “Greed” region for the last week, with the latest update putting the score at 68 out of a possible 100. The Crypto Fear and Greed Index numerically present the “emotions and sentiments” toward the cryptocurrency market and Bitcoin.

    The 68 Crypto Fear and Greed Index score is the highest Bitcoin has ever scored since it scored 66 on November 16, 2021, which was just days after Bitcoin hit its all-time high above $69,000.

    However, despite the Crypto Fear and Greed Index score being high, a majority of technical indicators still point to a strong bullish trend which points to a possible long-term bull run over the next days.

    The post Bitcoin surges above $30,100: here are the driving factors appeared first on CoinJournal.

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  • Bitcoin price retests $29,300: consider this key metric

    Bitcoin price retests $29,300: consider this key metric

    • Bitcoin price has broken above $29k, testing the $29,300 zone.
    • On-chain data shows BTC holders are increasingly betting long on the asset.
    • A macro sentiment indicator suggests Bitcoin price is poised for a parabolic move.

    Bitcoin rose more than 4% on Monday to break above $29,300 again, with data showing the gains come amid a rising count of BTC holders.

    The week ahead is expected to be huge for the market in terms of the economic data releases. But even as the broader market awaits the US consumer price index report, Santiment says most trader in the Bitcoin market are increasingly looking at the asset as a long-term bet.

    It’s a trend likely to buoy a new upside momentum for bulls.

    Bitcoin price indicator in focus – the aSOPR

    According to Bitcoin analyst Ali on Twitter, BTC is primed for a parabolic ride given the outlook of one of Bitcoin’s macro market sentiment indicators.

    In a price forecast he shared as BTC entered last weekend in a tight range around $28k, the analyst pointed to the Adjusted Spent Output Profit Ratio (aSOPR). The potential movement is still in play as Bitcoin crossed above $29k again on Monday.

    “Another Bitcoin indicator hints at explosive growth! Historically, aSORP (90d) below 1 signals a bear market, & above 1 signals a bull market. In 2015, 2019 & 2020, it led to 6,110%, 150%, & 579% gains. aSORP recently moved above 1, suggesting $BTC readies to go parabolic,” the analyst noted.

    BTC/USD currently trades around $29,200 and bulls will want to have the stubborn supply zone at $30k locked up with a major breakout performance. 

    If not, the consolidation seen in the past several weeks and a possible dip below the range is likely.

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  • Least amount of Bitcoin on exchanges since the previous bull market top in December 2017

    Least amount of Bitcoin on exchanges since the previous bull market top in December 2017

    Key Takeaways

    • The balance of Bitcoins on exchanges is in constant decline, now at the lowest point since December 2017 
    • Meanwhile, long-term investors continue to hold, soaking up the supply
    • Coins that have not been touched in 10 years now outnumber those held on exchanges 

    I wrote a piece last week on the exodus of stablecoins from exchanges, with the balance currently the lowest since October 2021, with 45% of the total balance of stablecoins on exchanges flowing out in the last four months. 

    But the glut in liquidity is not limited to stablecoins. The world’s biggest cryptocurrency is also seeing funds flow out. Only 11.8% of the total Bitcoin supply is currently on exchanges – that is the lowest since December 2017. 

    To jot your memory, December 2017 was the previous bull market peak. Bitcoin rose to within a hair of $20,000 before freefalling into a two-year-long bear market which ravaged the entire industry.

    Since January 2020, exchanges’ reserves of Bitcoin have been only going one way: down. It hints at the demand/supply imbalance that so many Bitcoin truthers advocate for, with the much-vaunted hard supply cap of 21 million coins for Bitcoin. 

    If demand keeps rising, they argue, the price can only go up because supply cannot keep up. 

    Central to this thesis is the resilience of long-term holders to keep a firm grasp on their bitcoins. And when assessing whether they have, the answer is a resounding yes. 

    The below chart presents long-term holders against the total exchange balance. In November 2022, the number of bitcoins last active 10+ years ago overtook the number of bitcoins on exchanges. 

    Of course, some of these long-term holders will be lost coins, either via their owner dying or losing their private keys. 

    But the stat is still interesting and speaks to the cohort of (very) early investors in Bitcoin who remain clinging to their coins with all their might. Remember, this includes the anonymous Satoshi Nakamoto, who is estimated to hold over 1 million coins, or 5% of the total supply. 

    Below is the chart displaying the current portion of the Bitcoin supply split out by time held and compared to the exchange balance. 

    The result is interesting, but even more so when considering that the last three years brought both the euphoric highs of Bitcoin at nearly $70,000 during the pandemic and then the bone-crushing fall through 2022, which saw it careen down towards $15,000. 

    In terms of the long-term trajectory of Bitcoin, it’s undoubtedly bullish. Of course, it all depends on whether the demand for additional Bitcoin will hold up. The supply may be getting squeezed, but that is all for nothing if the demand side doesn’t hold up its end of the bargain. 

    And on that note, the last year has been a big blow. Not only has capital flowed out of the space at an alarming rate, but a number of very high-profile scandals (LUNA, Celsius, FTX and so on) have rocked the space. The fear is that these episodes have dented the reputation of the cryptocurrency space and will inhibit the demand for Bitcoin on the intuitional side. Have people been put off moving into the space?

    It’s hard to say. But in looking at long-term holders, their confidence seems resolute. 

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  • Bitcoin on cusp of historic quarterly close

    Bitcoin on cusp of historic quarterly close

    The cryptocurrency market cap was around $1.24 trillion as Bitcoin price reclaimed the $28,500 level, with crypto poised to end the first quarter of 2023 higher. BTC price was up 24% in the past 30 days, and 83% up year-to-date.

    Crypto analyst Rekt Capital says Bitcoin is poised for a historic quarterly close, which could inform upward impetus over the next several months.

    Meanwhile, bullish momentum over the past three months has also seen Ethereum price jump nearly 64% YTD. ETH with a daily close at current prices will see it end March 15% higher. The outlook for most top altcoins is the same, with XRP, Binance Coin (BNB), Polygon (MATIC) and Cardano (ADA) set to end Q1, 2023 higher.

    Bitcoin and tech stocks higher YTD

    While the US stock market opened higher on Friday, with equities buoyed by the latest economic data, the overall gains across tech stocks pale when compared to Bitcoin. For instance, the S&P 500 was 6.75% up YTD at 11:30 am ET, the Dow Jones Industrial Average was 0.4% down over the period and the tech-heavy Nasdaq Composite was 16.7% up.

    However, Bitcoin and some tech stocks have outperformed most other assets this quarter. As noted above, BTC/USD is 83% up YTD and will likely close the quarter with more than 80% in gains. Tesla (TSLA) was 86% up at the time of writing, while Meta Platforms (META) was +63% YTD.

    The Apple (AAPL) stock was +30% YTD on Friday, while Amazon (AMZN) had gained more than 20% this quarter.

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  • Bitcoin volatility rising as $4.2 billion options set to expire Friday

    Bitcoin volatility rising as $4.2 billion options set to expire Friday

    Key Takeaways

    • Bitcoin volatility is the highest point since July 2022
    • Liquidity is extremely thin which is pushing volatility higher and accentuating price moves
    • $4.2 billion of options expire Friday, with bull set to profit following the recent surge up to $28,000

    Yesterday, I wrote a piece looking at how the correlation between Bitcoin and the stock market, notably tech stocks, has come back up. The relationship had loosened amid the banking turmoil that struck financial markets, triggered by the collapse of Silicon Valley Bank.

    As well as rising correlation, the market is also swinging wildly – the volatility is as high as it has been since July 2022, around the time Celsius sent evaporated into thin air and sent the market into mayhem.

    Why is volatility rising?

    The volatility spike is not surprising in light of the glut of liquidity currently in the markets. We crafted up a piece on this earlier this week, assessing how 45% of stablecoins had flowed out of exchanges in the last four months, with the balance now at the lowest point since October 2021. 

    It gives context to the recent Bitcoin price rise. With less liquidity in the markets, moves are naturally more violent, and Bitcoin has surged up to $28,000, now up 68% on the year. 

    While the move to the upside has been exacerbated by this thin liquidity, the opposite also holds true: the downside risk is elevated when markets are so thin. 

    It paints a picture of high risk for an asset that already oscillates wildly at the best of times. 

    Derivatives add to volatility

    Another factor? Derivatives open interest is absolutely soaring, with the below chart from Coinglass showing that options open interest is at its highest point since November 2021. 

    As I write this on March 31st, a mammoth $4.2 billion of Bitcoin options are set to expire. The below chart also shows the strike prices of the options – with a call/put ratio of 2.09 and Bitcoin currently trading close to $28,000, it will be a profitable day for many traders. 

    Digging into the numbers, there are 97,300 call options expiring at a strike price of $28,000 or less, compared to 24,500 put options. The dollar split is over $2 billion in favour of calls. 

    Looking at strike prices of the next level up, it is pretty much all call options. Between $28,000 and $32,000 there are 48,000 call options against 400 put options with a $1.4 billion split in favour of calls. 

    After a year of bears dominating, there will finally be some bulls primed to profit. 

    Indeed, looking at the Bitcoin spot holdings, it is showing more positive news all across the market. In December, the majority of Bitcoins were in loss-making positions, when comparing the market price to the price at which they last moved. 

    Today, however, 74% of the supply is in profit when using the same metric. 

     

    With interest rate policy expectations softening, Bitcoin has finally been allowed room to run. However, with thin liquidity and high volatility comes risk, although when it comes to Bitcoin, risk is hardly a foreign concept.

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  • Bitcoin correlation with stocks rises again, normal service resumed

    Bitcoin correlation with stocks rises again, normal service resumed

    Key Takeaways

    • Bitcoin had deviated slightly from stocks over the last couple of weeks 
    • Correlation has bounced back since
    • Tech-heavy Nasdaq continues to trade in lockstep with Bitcoin as investors in both asset classes look to shifting expectations around interest rates 

    It’s been an odd few weeks in the market. The banking wobbles over the last few weeks, triggered by the bank run on the crypto-friendly Silicon Valley Bank (SVB), caused everything to go a little wonky. 

    One of the most curious aspects of this was a deviation from the normal Bitcoin/stocks relationship. Or, sort of. Bitcoin raced upwards while markets digested the banking news, with the correlation – at least on a short-term rolling 30-day metric – dipping as per the below chart. 

    The chart also shows, however, that the correlation has since come back up. 

    As I wrote in a deep dive at the time, we have seen these cases of temporarily dipping correlation a few times over the last year, most notably with the FTX crash in November, as well as the Celsius and LUNA crashes before it. 

    But in each case, the correlation roared back. The above chart shows that it is beginning to do the same again this time. And the chart below shows that no matter what you swing it, the relationship here is pretty close (and forgive the axis crime on this one, please). 

    What happens next?

    The interesting question is what will happen going forward. The key development recently has been with regard to expectations around the future path of interest rates. 

    The forecasts have been transformed. With hiking interest rates exposing the mismanagement of the aforementioned collapsed banks, the trouble has led to the market forecasting a pullback in plans to hike further. 

    Instead of future hikes, there are now cuts in the pipeline, or at least according to the probabilities implied by fed futures. 

    And it was the transition into this new interest rate paradigm, occurring last year as inflation began to roar and it became clear that central banks needed to act, which kicked the correlation up between stocks and Bitcoin. 

    It is not that one is controlling the other, it is that Jerome Powell is controlling both. Tech stocks are particularly sensitive to interest rates, given the sector is valued so much by discounting future cash flows – and a lack of current profit – which is why the correlation, and bloodbath in 2022, was so strong between Bitcoin and the Nasdaq. 

    Whether a potential pivot back off this uber-tight monetary policy sparks a deviation in correlation going forward is yet to be seen. Perhaps it will to a certain extent, but at the same time, it remains difficult to come up with a strong argument that Bitcoin is ready to truly deviate. 

    A decoupling remains the ultimate bull vision for the asset, and perhaps it will get there one day in the future. But there is not much evidence, beyond blind hoping by those in the sector, that this is imminent. 

    Over a multi-year time horizon into the future? That is anyone’s guess. But if the past couple of years has taught us anything, it is that stocks and Bitcoin are paired at the hip, especially tech stocks. The past couple of weeks, and the resumption of this trend, is actually more of a reminder of this than a proof against the theory.

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  • 17 straight days of positive realised profit for Bitcoin, the longest streak in a year

    17 straight days of positive realised profit for Bitcoin, the longest streak in a year

    • On-chain profit metrics have picked up as the Bitcoin price has risen
    • Net realised profits have been positive for 17 days, the longest streak in a year
    • 74% of the Bitcoin supply is in profit, three months after it dipped below 50% after FTX collapsed and the Bitcoin price fell towards $15,000
    • Volatility has picked up but it is the thin liquidity which is really helping Bitcoin make a run
    • It’s been a great quarter for investors, but there remains peril, writes our Analyst

    Bitcoin had an unforgettable year in 2022 for all the wrong reasons, a collapse in price coinciding with several ugly scandals that rocked the cryptocurrency market at large. 

    Thus far this year, however, it has been bouncing back. Up 71% as we close out Q1, it is trading north of $28,000 for the first time since June 2022. 

    Looking into on-chain metrics, the positive sentiment is clear.

    Net realised profit at one-year highs

    The net realised profit of all coins, that is the difference between the price at which a coin moves and the last price it moved at, is on its longest positive run since this time last year, in March 2022. 

    For seventeen days now, the net realised profit has been positive. In other words, coins are moving at prices higher than what they were bought at (or the price at which they last moved).

    There was an 18-day positive streak in late March / early April last year, and beyond that, we need to go back to Q4 of 2021 to see such a streak, when Bitcoin was trading at all-time highs. 

    Granted, the size of the profits over the last two weeks have not been as outsized as we have seen in previous periods, but the very fact that it is a positive run after the year Bitcoin has had is notable. 

    Three quarters of the supply is in profit

    Another way to see how much things have changed is that three-quarters of the total supply is currently in profit. 

    Just before Christmas, I reported when this figure dipped below 50%, meaning for the first time since the brief flash crash at the start of COVID in March 2020 when the financial markets all went bananas, the majority of the Bitcoin supply was loss-making. 

    Three months later, the picture is a lot brighter, with 74% of the total supply now in profit. 

    Liquidity remains low as stablecoins fly off exchanges

    Interestingly, this rise in prices and profit positions is all occurring at a time when liquidity is extremely low in the market. 

    In a deep dive yesterday, I compiled an analysis showing that the balance of stablecoins on exchanges has fallen 45% in the last four months and is currently the lowest since October 2021. 

    Perhaps that is not a coincidence. The markets are ultra-thin right now, and Bitcoin, which is volatile at the best of times, has found it easier to move aggressively as a result. This also helps explain why it has outperformed the stock market so significantly, despite being so tightly correlated with it recently (although some believers are arguing it is due to banking failures pushing people to Bitcoin, but that feels like a reach). 

    Then again, Bitcoin is going to Bitcoin, and its recent volatility is not anything to write home about when looking historically, even if it has picked up compared to the relatively serene period post FTX collapse. 

    To wrap this up, it’s been a superb few months to kick the year off for Bitcoin, which is a welcome reprieve for investors who got absolutely battered last year. On-chain profit metrics have come right up as sentiment improves and prices jump. 

    But there is also low liquidity which is helping it run-up, while the wider economy presents plenty of uncertainty. Sure, it’s a great start, but it’s not out of the woods yet. 

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  • 3 German computer scientists bringing scalability to Bitcoin using zk-proofs

    3 German computer scientists bringing scalability to Bitcoin using zk-proofs

    • The three German scientists formed ZeroSync Association to bring Zero-Knowledge Proofs to Bitcoin.
    • The association has received sponsorship from Geometry Reaserch and StarkWare Industries.
    • Geometry Reaserch is a crypto investment firm while StarkWare Industries is the software company behind StarkNet.

    Bitcoin currently uses the proof-of-work (PoW) consensus mechanism which in a way limits its scalability. Its rival blockchain Ethereum also used PoW but changed to Proof-of-Stake (PoS) consensus mechanism through the Merge Upgrade.

    Three German computer scientists have created a Swiss non-profit association called ZeroSync Association to help bring scalability to Bitcoin using zero-knowledge proofs (zk-proofs), a cryptographic technique whose popularity on Ethereum has surged considerably.

    What is Zero-knowledge Proofs?

    Zero-knowledge Proofs, commonly referred to as zk-proofs, is a cryptographic technique that uses cryptography to prove the validity of information revealing the information to the public.

    By deploying kz-proofs on Bitcoin means nodes will be able to sync almost instantly compared to hours and sometimes days that it takes to download the chain’s current 500GB data.

    ZeroSync Association already has a working prototype

    At the moment, ZeroSync has already developed a working prototype that allows users to validate who owns what and the transaction history on Bitcoin without having to download the entire chain or using a third party.

    The prototype can however only verify Bitcoin consensus rules but not transaction signatures. The prototype is also a bit chunky and still needs to be optimized for security and speed.

    When fully deployed on Bitcoin ZeroSync will allow verification of transaction of Bitcoin using cryptographic proof instead of trusting honest nodes as suggested by the Bitcoin founder Satoshi.

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  • Bitcoin slides off Fed meeting before bouncing back, but what next?

    Bitcoin slides off Fed meeting before bouncing back, but what next?

    Key Takeaways

    • Federal Reserve hikes 25 bps, Bitcoin drops over 6%
    • Bounceback in prices follow, however, as market bets on rate cuts down the line
    • Bitcoin originally fell to $26,700 and is now back at $27,700
    • Tight monetary policy appears to be coming to a close, which is exactly what Bitcoin investors want to hear
    • The flipside is that Bitcoin’s reputation may have been tarnished by the chaos in the industry over the last year
    • Whether institutional money and Wall Street capital will trust crypto again remains to be seen

    As has been the case over the last year now, Bitcoin continues to oscillate wildly based off interest rate expectations. 

    The orange coin took a tumble Wednesday off the back of the latest FOMC meeting, as interest rates were hiked 25 bps despite some analysts calling for a pause following the banking turmoil of recent weeks. 

    Why did Bitcoin fall?

    Such has been the chaos in the banking markets, markets ahead of the meeting had priced in a genuine chance that rate hikes would be no more. 

    Silicon Valley Bank (SVB) triggered the crisis, which last week spread to Europe before the spectacular demise of Credit Suisse, the Swiss institution founded in 1856. 

    With deposits fleeing banks and markets reverberating, things were breaking – as they tend to do when rates are hiked hastily. And this past cycle has been the most rapid form of tightening in recent memory. 

    Bitcoin fell from $28,500 to $26,700 as the Fed announced a 25 bps hike, a fall of 6.3%. 

    However, Bitcoin has since bounced back somewhat, trading at $27,600. This came as the market began digesting the discourse from Fed chair Jerome Powell around the future path of interest rates. 

    While the hike did come yesterday, it feels increasingly certain that tight monetary policy is coming to a close. It is worth remembering that before SVB’s demise, this hike was virtually guaranteed to be 50 bps. 

    And looking out to rates by the end of July, the market is forecasting cuts rather than hikes. So while the 25 bps hike may have been hawkish, the language afterwards and conclusion coming out of the meeting was very much the opposite. 

    Will Bitcoin go up?

    The question on everybody’s lips within crypto is then what does this mean for Bitcoin’s price? As always, it’s a difficult question to answer, but the future undoubtedly looks brighter for the coin today than it did a few months ago, that is for certain. 

    Not only is further removed from the scandal of FTX and the wave of bankruptcies that followed the sordid collapse of the former tier-1 exchange, but the end appears nigh with regard to the tight monetary policy. 

    Bitcoin was launched in 2009 and hence had never experienced anything other than a raging bull market in the wider economy. The S&P 500 increased seven-fold from the nadir of the GFC to its peak – and Bitcoin, alongside tech stocks, rode the wave of low interest rates, warm money printer and an all-around perfect climate. 

    As inflation roared last year, however, this flipped entirely. With interest rates hiked aggressively, there was no way for Bitcoin to sustain its previous levels of buoyancy. Down it came, and down it came hard. 

    Finally, it appears that the harsh monetary policy which has dragged it through the gutter is nearing an end. And while this doesn’t guarantee anything, it certainly removes the shackles so that there is at least a possibility that it raises. 

    Has Bitcoin’s image been tarnished?

    The flip side of the argument is that the scale of the damage over the last year has been so substantial that Bitcoin’s long-term trajectory has been dampened, and it won’t be able to get on the same track. 

    Crypto winters have come and gone in the past, but this recent one coincided, like we said, with a rout in the wider economy for the first time ever. It also came while Bitcoin was a mainstream financial asset – something which wasn’t true in previous cycles. 

    Collapses like FTX, LUNA and Celsius not only pillaged capital out of the space, but embarrassed crypto on the big stage, as unfair as that is to the good players in the industry. Will institutional funds and trad-fi money be happy to trust crypto again?

    It’s an interesting debate, and only time will tell. 

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  • Bitcoin is rallying due to interest rate forecasts, says Coinjournal’s Dan Ashmore

    Bitcoin is rallying due to interest rate forecasts, says Coinjournal’s Dan Ashmore

    Key takeaways

    • Bitcoin is trading above the $28k level for the first time since June 2022.

    • Coinjournal’s Dan Ashmore believes that the interest rate forecasts are responsible for the ongoing rally by Bitcoin and other cryptocurrencies.

    • Many in the market still consider the recent banking crisis as the reason why investors are entering the crypto market.

    Interest rate forecasts behind Bitcoin’s rally

    Bitcoin, the world’s largest cryptocurrency by market cap, has been performing excellently over the past few weeks. At press time, the price of Bitcoin stands at $28,411, up by 13% over the last seven days.

    Many in the crypto space attribute the ongoing crypto rally to the collapse of a few banks, including Signature Bank, Silvergate Bank, and Silicon Valley Bank. 

    However, during an interview with CNBC, Coinjournal’s Dan Ashmore pointed out that Bitcoin’s rally has to do with the interest rate forecasts rather than the recent banking crisis.

    Regarding the ongoing rally, Ashmore said;

    “It is a reaction to the complete flip in interest rate forecasts in the wider economy. If you go back to before the Silicon Valley Bank collapse, there was an 83% probability that the interest rate would be increased by 100 basis points by the summer. Today, when we look at that, it is completely the opposite, and there is almost 100% of rate cuts.”

    He added that the crypto market is reacting to the probability that the Fed’s recent interest rate hikes are coming to an end.

    Interest rate cut is music to crypto investors

    With Bitcoin trading at $28k per coin, investors would be optimistic that prices could soar higher over the coming days and weeks.

    According to Ashmore, cryptocurrencies trade as risk-on assets, and an interest rate cut is music to the ears of crypto investors. 

    Ashmore also discussed the correlation between cryptocurrencies and tech stocks. According to the Coinjournal analyst, while many expect crypto to be an independent hedge, the assets still very much correlate with the stock market, especially tech stocks. He concluded that

    “The NASDAQ index rises, Bitcoin’s price also rises. The NASDAQ falls, and Bitcoin also falls a little more. The last couple of weeks have been interesting as Bitcoin has outperformed the NASDAQ. But it is a reflection of the fact that Bitcoin is trading in correlation with the interest rate forecasts.”

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