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Bitcoin on-chain data and BTC’s recent price rally point to a healthier ecosystem

Positive signs of Bitcoin's recovery can be seen in on-chain, spot exchange and futures data.

Bitcoin (BTC) had a rough year all throughout 2022.

But fresh on-chain and futures market data show positive signs that the leading cryptocurrency by market capitalization has started to recover.

After a bevy of short liquidations, the futures market is pointing toward renewed equilibrium. According to data from Glassnode, short position liquidations cleared out unhealthy market speculators, on-chain and exchange data now point to an improving spot market and exchange netflows.

A large group of investors that were previously at a loss is now back in the category that Glassnode analysts label as “unrealized profits.”

Massive short liquidations set the groundwork for new investors to thrive

Futures data typically hold an equilibrium between longs and shorts. As the market moves, investors tend to update their futures to avoid liquidation. Conversely, in mid-January investors were caught off guard which resulted in an all-time high of 85% short liquidations.

Futures liquidation long versus short ratio. Source: Glassnode

The short liquidation dominance has helped fuel the current Bitcoin rally. In January 2023, over $495 million in short futures were liquidated. Liquidated shorts create automatic Bitcoin purchases thus driving up the BTC price. The year-to-date liquidations have three large waves that peaked at $165 million in one day of liquidations.

Total liquidations. Source: Glassnode

After the historic amount of short liquidations, the futures market is trending towards longs. On Jan. 30, 51.46% of open interests are long positions rather than shorts.

Long versus short ratio. Source: Coinglass

The liquidation of shorts not only helped Bitcoin price rally but also seemingly suggests a return of positive sentiment in the BTC market.

Glassnode researchers said:

“Across both perpetual swap, and calendar futures, the cash and carry basis is now back into positive territory, yielding 7.3% and 3.3% annualized, respectively. This comes after much of November and December saw backwardation across all futures markets, and suggests a return of positive sentiment, and perhaps with a side of speculation.”
Bitcoin annualized premium. Source: Glassnode

Centralized exchange netflows reach equilibrium

In March 2020 centralized exchange (CEX) Bitcoin balances reached an all-time high. Since the all-time high was reached, Bitcoin has flowed out of spot exchanges. Approximately 2.25 million BTC are currently held across 21 of the top exchanges, which is a multi-year low. The 11.7% of the total Bitcoin supply held on centralized exchanges was last witnessed in February 2018.

Bitcoin exchange balance. Source: Glassnode

Typically throughout Bitcoin’s history, exchange inflows and outflows are similar creating an even balance. The balance was disrupted in November 2022 when net outflows of Bitcoin from exchanges reached $200 million to $300 million per day. The large outflow during this period was historic, reaching negative 200,000 Bitcoin leaving exchanges for the month.

Bitcoin net position change on exchanges. Source: Glassnode

As Bitcoin started gaining bullish momentum in January 2023, centralized exchange inflow and outflow has normalized. The netflows are now closer to neutral showing a reduction in the high outflow trend.

Multiple Bitcoin investor cohorts return to the “unrealized profit” zone

Bitcoin’s movement in and out of exchanges helps provide analysts an estimate for investors’ BTC acquisition price. During the 2022 bear market, only investors from before 2017 were in potential profit. Investors arriving to Bitcoin after 2018 were all at an unrealized loss.

According to Glassnode researchers,

“Through the 2022 downtrend, only those investors from 2017 and earlier avoided hitting a net unrealized loss, with the class of 2018+ seeing their cost basis taken out by the FTX red candle. The current rally however has pushed the class of 2019 ($21.8k) and earlier back into an unrealized profit.”
Bitcoin average withdrawal price. Source: Glassnode

The fact that a growin number of investor cohorts have returned to profitability is a good sign, especially after Bitcoin witnessed record realized losses in December 2022.

Two of the largest investor groups, those who purchased BTC on Coinbase and Binance, hold an average BTC acquisition price of $21,000. As Bitcoin continues to try to reach $24,000, any upcoming correction caused by macro factors may push down the unrealized profits in these groups.

Exchange average withdrawal price. Source: Glassnode

Positive signs of Bitcoin's price recovery can be seen in on-chain, spot exchange and futures data. The futures market is indicating a renewed equilibrium following a record-high amount of short liquidations.

The market is now showing improved exchange netflows and spot market activity suggests that investors are slowly trickling back into the crypto market.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

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Binance stablecoin BUSD sees a sharp market cap drop amid solvency and mismanagement worries

Persistent worries about Binance’s solvency, increased regulation of the crypto sector and questionable use cases are chipping away at BUSD’s market capitalization.

Stablecoins in the cryptocurrency market help provide U.S. dollar-pegged tokens within the volatile industry. In bull markets, the market capitalization of stablecoins tends to decrease as investors flock to more volatile assets; and in bear markets, investors seek shelter in low-volatility stablecoins, thus increasing their market caps.

On Jan. 26, the total market capitalization for stablecoins like Tether (USDT), USD Coin (USDC), Binance USD (BUSD) and Dai (DAI) is over $131 billion.

Stablecoin supply dominance. Source: Glassnode

Stablecoins are so crucial to the future of crypto that Moody’s, a well-respected analytics agency, is planning to develop a scoring system, which may help reduce the speculation and fear that some investors have with stablecoins.

Such fear amid a lack of stablecoin transparency has led one of the top stablecoins, BUSD, to see a major usage decline in recent weeks.

Let’s examine the factors affecting the BUSD stablecoin.

BUSD’s market cap takes a major hit

While the BUSD market cap witnessed a large bump on Sept. 30, 2022, those gains came from Binance’s decision to forcefully swap the exchange’s USDC holders to its own stablecoin. Those gains have since evaporated. At the time, the automatic conversions took $3 billion off of USDC’s market cap.

BUSD’s market cap has continued to fall due to problems with the dollar-pegged tokens’ management that first came to light in January 2023. While Binance pushed back on reports that the stablecoin was not fully backed, investor fears led to a major exodus.

According to blockchain analytics provider Nansen, the circulating supply of BUSD decreased to $15.4 billion on Jan. 25. The drop represents a decrease of $1 billion from the previous week and $2 billion compared with December 2022.

Stablecoin market caps. Source: Nansen

The most recent decline sped up BUSD’s market cap decrease from $22 billion when worried investors rushed to withdraw money from Binance after it misrepresented the amount of digital assets in its collateral reserves by combining corporate holdings on reports.

BUSD inflows struggle

When the price of Bitcoin (BTC) is on the rise, like it has been recently, stablecoins typically see a decrease in inflow as investors sell for other assets. A way to measure demand for stablecoins is to look at exchange inflows.

According to analytics provider CryptoQuant:

“Higher value indicates investors who deposited a lot at once are increasing recently. For stablecoin, value rise indicates buying pressure.”

This means negative numbers show a decrease in buying pressure. While all stablecoins are seeing lower demand or inflows, BUSD has witnessed nearly 3x more inflow.

All stablecoins' inflow versus BUSD. Source: CryptoQuant

The massive decrease in demand may continue as the markets continue to rise and questions around BUSD remain.

The majority of BUSD is on Binance

Stablecoins see an uptick in demand when they are utilized in trading pairs with altcoins. The trading use case works on both centralized exchanges (CEX) and decentralized exchanges (DEX).

A concerning statistic surrounding BUSD is the lack of stablecoin use outside of its parent exchange, Binance. While $13.8 billion in BUSD resides on Binance, the next closest tally is $32.6 million in BUSD on Crypto.com. While Crypto.com may be the second-largest exchange for BUSD, USDC is the largest stablecoin on the CEX, with $582 million, dwarfing BUSD’s numbers.

Stablecoins on exchanges, sorted by BUSD. Source: Nansen

The lack of use cases following the major decrease in demand for BUSD does not bode well for its market cap if the trend sustains over a long period of time. Combining these two negatives with the recent move by SWIFT to ban dollar transfers lower than $100,000 on Binance suggests that the stablecoin could continue to face major headwinds.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

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Bitcoin dialogue at WEF requires ‘open-mind’ — Davos 2023

“It’s about taking inspiration from what we’ve done.” Lugano’s Plan B hopes to drive Bitcoin adoption dialogue at future World Economic Forum conferences.

The World Economic Forum (WEF) convenes in Davos annually, taking over the Swiss skiing town. The main promenade is flush with events and companies renting out properties, with an increasing presence from companies in the cryptocurrency and blockchain space.

The entrance to the WEF compound is restricted by cement barriers and security personnel, drawing an invisible line between the conference and the rest of Davos. Curiously, the last building on the fringe of the conference was branded with familiar logos, that of Polygon and the ever-recognizable Bitcoin (BTC) symbol.

Cointelegraph stumbled upon Pietro Poretti while shooting footage of the Bitcoin logo emblazoned on the Tech Lodge stand. Poretti is the director of Lugano’s Economic Development department. This Swiss city has opened up BTC and crypto payments for various municipal accounts for its residents through its Lugano Plan B project.

Bitcoin was not on the official agenda of the WEF in 2023. Crypto and blockchain featured across different workshops during the week, but these conversations focused more on Web3, the metaverse, central bank digital currencies and blockchain payment systems rather than decentralized cryptocurrency adoption.

Pietro Poretti speaks to Cointelegraph’s Gareth Jenkinson outside the World Economic Forum compound in Davos in January 2023.

2023 is the second year that Lugano’s Plan B set up shop in Davos, as it looks to meet new people, create connections and share its story driving real-world BTC adoption and use cases. The project has been operational since March 2022 and Poretti says while it is in its infancy, it’s about educating and demonstrating the utility of cryptocurrencies:

“It’s about promoting crypto payments throughout the city by the city administration. Soon in Lugano, you’ll be able to pay taxes, fines, anything you pay to the municipality.”

Lugano Plan B merchants accept payment in the native LVGA tokens, Bitcoin, Lightning Network payments and Tether (USDT). This year, sharing experience with other industries, policymakers and public officials has been a focus. Poretti says payments innovation has been approached with “small but very concrete steps” focused on providing different but complementary payment gateways.

“I think that at the end of the day if people see the benefits of having an alternative, it’s not something necessarily will replace or is going to replace.”

Lugano’s cryptocurrency payments initiative could serve as a tangible case study for the adoption of decentralized payment options worldwide, including inside the WEF. That has not yet happened, but representatives from other cities have asked Lugano for the “hows and whys” of their Plan B initiative, which Poretti describes as progress:

“We think that it’s not about duplicating the exact same approach elsewhere in the world, but maybe it’s about taking inspiration right from what we have done and and and learn something also from our experience. I think that in this respect, Lugano still is a little bit of a pioneer.”

While the likes of Ripple and Circle were prominent cryptocurrency ecosystem participants involved in WEF workshops, Poretti believes a more open-minded approach will be required for Lugano to sit at the table to outline their crypto-adoption efforts.

Related: TradFi and DeFi come together — Davos 2023

This requires many moving parts, including financial and legal services participation and political support for similar initiatives. Perhaps most importantly, Poretti believes users will drive discourse and adoption of solutions like Bitcoin:

“If your citizens are on board and they say, ‘let's try, we are curious, we are open,’ then when we start seeing the benefits.”

Poretti believes this drives job creation, stimulates economic growth and ensures technological and digital adoption.

Bitcoin Suisse was another Swiss-based cryptocurrency industry player that Cointelegraph managed to connect with in Davos. CEO Dirk Klee highlighted the company’s role in founding Crypto Valley and its early work to drive BTC adoption in Switzerland, which has become a leader for worldwide cryptocurrency adoption in many respects.

“I would call it the world headquarters of wealth management and the early adopters, right? We’re partially crypto natives, but who grew into wealthy individuals early on.”

Klee said that Switzerland’s reputation as a well-regulated and safe place to do business has also helped the local cryptocurrency ecosystem grow over time while conceding that its an ongoing journey.

Highlighting tough market conditions over the last year, Klee suggested that the industry is at a point where trust and confidence need to be built before considering more participation in events like the WEF:

“A lot of trust has been destroyed and eroded in the last year and we want to be kind of the center point of the next stage of institutionalization, making the place more accessible, easier to use, but also safer.”

Klee also wants to see the likes of Bitcoin Suisse potentially involved in cryptocurrency workshops in future WEF conferences and described going mainstream as “the ultimate goal.“

The likes of Lugano and various Swiss regions are prime examples of the potential for cryptocurrency adoption for everyday payments. Furthermore, the presence of Plan B and Bitcoin Suisse in Davos proves that the industry is driving its own conversations with interested parties outside the walls of the World Economic Forum.

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Bitcoin price rally provides much needed relief for BTC miners

Bitcoin’s prolonged breakout above $22,000 is easing pressure on razor thin profit margins for BTC miners.

Bitcoin mining powers network transactions and BTC price. During the 2021 bull run, some mining operations raised funds against their Bitcoin ASICs and BTC reserves.

Miners also preordered ASICs at a hefty premium and some raised funds by conducting IPOs. 

As the crypto market turned bearish and liquidity seized within the sector, miners found themselves in a bad situation and those who were unable to meet their debt obligations were forced to sell the BTC reserves near the market bottom or declare bankruptcy

Notable Bitcoin mining bankruptcies in 2022 came from Core Scientific, filing for bankruptcy, but BTC’s early 2023 performance is beginning to suggest that the largest portion of capitulation has passed.

Despite the strength of the current bear market, a few miners were able to increase production throughout 2022 and on-chain data shows Bitcoin miner accumulation began to increase in December 2022 and momentum appears to be continuing into 2023.

Bitcoin’s rally to $22,000 improves miner margins

The 2023 Bitcoin rally which saw BTC price hit a yearly high of $22,153 on Jan. 20, a 17% 7-day increase, has significantly helped BTC mining operations.

An increase in Bitcoin price and the network’s hashprice are helping BTC miners that kept net positive balances at the end of 2022 which is improving business stability. In addition, now Bitcoin miners are mostly back in profit.

Public miners Bitcoin sold vs mined. Source: Hashrate Index

While more miners are turning back on Bitcoin mining rigs, the difficulty is increasing which may hinder future upside. With conditions improving will Bitcoin miners continue to accumulate or continue the trend of selling?

Recapping 2022, Jaran Mellerud a Bitcoin mining analyst for Luxor Mining said:

“Between January and November, the public miners offloaded 51,180 bitcoin, while producing 47,284 bitcoin.”

BTC hashprice, a metric that measures the market value of mining or computing power, provides insight into Bitcoin mining operations’ profitability.

Since Jan. 1, 2023, hashprice is up by over 20% and on Jan. 19. Bitcoin mining’s profitability grew from $0.06 per Terra Hash per day (TH/d) to $0.07874 TH/d and this has benefited from BTC’s price rally. Hashprice has not witnessed the recent levels since early October 2022.

Bitcoin hashprice. Source: Hashrate Index

Although Bitcoin mining profitability has improved since the start of 2023, the industry is still facing rough waters ahead. According to Nico Smid, co-founder of Digital Mining Solutions:

“The recent increase in hashprice is positive, but many miners are still operating on thin margins. A year ago, the hashprice was at $0.22/TH/day. While the market has reached its lowest point, the current economic conditions for mining remain challenging.”

Bitcoin miners are still selling the bulk of their mined BTC

Bitcoin miners are benefiting from the uptick in price and data shows many are continuing to sell their rewards.

Bitcoin miner positions and revenue. Source: CryptoQuant

The most robust mining operations actually limited debt and expansion or used a strategy of selling minded BTC while in profit. Using self-reported data, Anthony Power, Bitcoin mining analyst for Compass Mining, compiled a list of miners reserves at the start of the year versus the end of the year.

Marathon Digital, the top holder out of the listed Bitcoin mining companies, held 8,133 BTC at the end of December 2022. The company is planning to increase production based on hashprice profitability to further their advantage.

Mining difficulty could hinder profits in the future

With more Bitcoin miners turning their BTC rigs back on, the mining difficulty metric adjusted upward by 10.26% on Jan. 16. Bitcoin difficulty indicates the time and cost to mine BTC in order to receive rewards. The adjustment was the largest since October 2022 and the increase in difficulty makes it more expensive for Bitcoin miners to earn rewards through the proof-of-work (PoW) consensus mechanism.

Bitcoin mining difficulty. Source: Hashrate Index

With the upcoming Bitcoin halving event due in 2024, mining BTC will become even more difficult and possibly more expensive for miners, providing more stress on already thin margins. On the upside, the last halving event in 2019 was followed by a 300% gain for BTC the year before.

While miners are currently seeing some relief after a tough year, potentially rough roads lie ahead. The business operations are seemingly improving with Bitcoin miners selling for profits rather than taking on debt against Bitcoin holdings.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

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ConsenSys slashes headcount 11% as chief economist reveals formula for adoption

ConsenSys CEO Joseph Lubin confirmed the company would be cutting 96 of its staff to focus its resources on its core businesses.

ConsenSys, the parent company behind MetaMask, is letting go of 11% of its workforce, with CEO Joseph Lubin blaming “uncertain market conditions” brought on by recent collapses.

In a blog post from ConsenSys CEO Joseph Lubin on Jan. 18, the blockchain firm CEO said “poorly behaved” centralized finance (CeFi) actors have cast a “broad pall on our ecosystem that we will all need to work through.”

Lubin said the decision will impact 96 employees and is part of plans to focus its resources on its core businesses.

Speaking to Cointelegraph a few days before the layoffs were officially announced — though they had already been widely reported — Lex Sokolin, the chief cryptoeconomics officer of ConsenSys said that the industry was still far from mass adoption globally.

“We're still in a place where this is emerging technology. It’s not entirely well understood by the whole public,” he said.

According to Consensys, during the last bull run, over 30 million users each month were using MetaMask to access DeFi protocols, mint and trade NFTs and participate in DAOs. While promising, that’s a drop in the ocean globally.

“MetaMask has 30 million monthly users and in Web3, there are maybe 500 million addresses,” Sokolin said. “But that’s not five billion people.”

Asked when crypto will see mainstream adoption, Sokolin said it was all about having enough compelling use cases for crypto, as well as a thriving ecosystem to support it.

Lex Sokolin, Chief Cryptoeconomist, ConsenSys Source: Lexsokolin.com

He also rejected the idea that it will come as a result of better user experience and clearer regulations.

“They're not the things that people say [such as] ‘when is UI going to be better’, or ‘when is regulation going to make it better.’ Those are important, but [...] they're not the catalyst,” said Sokolin adding:

“The catalyst of things is, one: Is there going to be enough stuff to buy on Web3 that I want to own?”

“If I live in Web3 and my avatar and my social media and my data and my status as a person, prestige, community belonging [...] is tied to me owning digital objects [...] you're gonna inevitably get to a place where everyone wants to be doing commercial transactions in Web3.”

“So for me, economic adoption is the most important thing. Because it's going to pull the rest of it into the ecosystem.”

Related: Crypto adoption in 2022: What events moved the industry forward?

In his latest post, Lubin said the company will be focused on streaming its workforce and focusing its business on core value drivers, including end-user custody solution MetaMask, developer platform Infura, and “new offerings” that grow Web3 commerce and decentralized autonomous organization (DAO) communities.

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Bitcoin price strength intensifies as risk-loving traders bring volume back to the crypto market

An increase in Bitcoin trading volume and positive on-chain data appear to be the primary forces behind BTC’s newfound strength.

The beginning of 2023 has provided Bitcoin (BTC) with bullish indicators and the rally to a year-to-date high at $21,647 has crypto traders hopeful that the worst part of the bear market has ended. The surge effect of BTC’s bullish price action is also carrying over to Ether (ETH) and Bitcoin mining stocks.

The reduction in Bitcoin Fear and Greed index to neutral is possibly driven by volume increases, Bitcoin on-chain data and BTC price decoupling from equities markets. While not all analysts believe a market bottom is in, let’s dive into the data.

Trading volume and volatility return

Bitcoin’s price spike has been accompanied by massive growth in trading volume. Over the last week, BTC volume has more than doubled, reaching $10.8 billion, a 114% increase over 7-days.

Bitcoin trading volume. Source: Arcane Research

Increased trading typically correlates to an increase in volatility. While the current 2.4% 7-day volatility levels are still below the 2022 7-day average of 3.1%, Bitcoin has remained consistent during the 2023 rally.

BTC 30-day and 7-day volatility. Source: Arcane Research

Centralized exchanges (CEX) have been struggling with low trading volume, meaning lower fees for the business, inducing layoffs. The increase in volume for all exchanges is likely welcomed news.

Trading volume increases coincide with profits returning

Bitcoin on-chain realized profits are retesting the adjusted spent output profit ratio (aSOPR) value of 1.0, which some analysts believe to be a key resistance level. The aSOPR metric historically shows a change in the overall market trajectory as profits are absorbed by trading volumes.

BTC aSOPR 7-day exponential moving average. Source: Glassnode

According to Glassnode,

“An aSOPR break above, and ideally a successful retest of 1.0 has often signaled a meaningful regime shift, as profits are realized, and sufficient demand flows in to absorb them.”

Reversing a trend that started in May 2022, the on-chain realized profit and loss ratio for BTC is up over the 1.0 level, hitting 1.56 profits over losses on Jan. 16, 2023.

When more traders are in the green on BTC purchases and realizing profit without the price plummeting, it signals market strength.

Realized profit and loss ratio for BTC. Source: Glassnode

On-chain analytics are also showing positive signs that Bitcoin’s recovery is potentially on the way. The more the market can absorb sell pressure without price capitulation speaks to the reduced overall market fear and possible macro shift.

Related: Bitcoin on-chain and technical data begin to suggest that the BTC price bottom is in

Bitcoins softening correlation to equities

Volatility, realized profits and trading volume are helping Bitcoin decouple from equities. As reported by Cointelegraph, Bitcoin’s price action typically has been closely correlated to U.S. equities.

Bitcoin’s 30-day correlation to the Nasdaq reached 0.29 on Jan. 17, 2023 the highest BTC divergence from equities since December 2021.

Vetle Lunde a Senior Analyst at Arcane Research explains what decoupling means to the Bitcoin market.

“Softening correlations is a positive development in the market.”

Bitcoin’s previous correlation could have been caused by institutional investors bundling BTC with other risk assets and large growth companies like Tesla holding exposure.

Now that institutional investors and growth companies are holding less Bitcoin, correlation to markets may lessen in the future.

Equities markets could continue to flutter due to the resiliency of high inflation, but Bitcoin’s divergence from the stock market could help BTC become an investment hedge. According to some analysts, if Bitcoin can become a hedge to equities, institutional investors may return to the market.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

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Bitcoin price rally to $19.5K prompts analysts to explore where BTC price might go next

Bitcoin price is steamrolling toward the all-important $20,000 level, leading analysts to speculate on where BTC price might go.

After Bitcoin (BTC) hit a yearly high of $19,501 on Jan. 13, where is it headed next?

Bitcoin is currently witnessing an uptick in bullish momentum after the positively perceived Consumer Price Index (CPI) report was followed by a strong rally across the crypto market. 

The recent rally in Bitcoin is creating increased volume levels and higher social engagement on whether the price is in a breakout of fakeout mode.

Is the Bitcoin bear market over?

While the market is still technically in a bear market compared to last week, investor sentiment is improving. According to the Fear and Greed Index, a crypto-specific metric that measures sentiment using five weighted sources, investors’ feelings about the market hit a monthly high.

Bitcoin Fear and Greed index. Source: alternative.me

Bitcoin price is now approaching the psychologically important $20,000 level and many analysts and traders are issuing their thoughts on where BTC price could head next.

Let’s explore a few of these perspectives.

Bitcoin trading volumes remain a concern

Bitcoin price has yet to recover from its pre-FTX levels, but reached above $19,501 on Jan. 13 for the first time since Nov. 8, 2022. Despite the strength of the recent rally, some analysts believe BTC price needs to reach $21,000 before the current bullish trend can be sustained.

According to Glassnode analysis,

“A renewed bullish trend that started on January 1st drove bitcoin to the $18.6 - $18.9k level, yet a cross over to $19k is necessary to claim a new trading channel around $19-$21k. Resistance is expected around these levels as bitcoin faces a mid-term downward trend. If the price fails to break over the trend line, we expect a retrace toward the $16-$17k area.”
BTC price compared to volume. Source: Glassnode

The lack of trading volume around $18,000 shows the weakness in the current on-chain and centralized exchange (CEX) activity. The largest volumes and overall activity seem to surround the $16,000 level, suggesting that is a more solid floor than the current price range. With less volume surrounding levels higher than $20,000, Bitcoin’s rally could be capped at $20,000.

Is it just a bear market rally?

Bitcoin is still facing headwinds including massive exchange layoffs in a tightening macro economy, Gemini and Genesis legal issues and the potential establishment of a US House crypto-focused subcommittee.

In addition, Bitcoin’s relative strength index (RSI) is currently showing BTC as overbought. According to RSI analysis, a sharp downtrend may form as the price corrects.

Bitcoin RSI. Source: TradingView

The macro markets are also at major resistance levels. The United States Dollar index (DXY) is at key support which means risk assets like Bitcoin may start to see a sell-off if the index recovers. Bitcoin remains correlated to equities and the SPX mini futures index is also showing signs of a pullback.

TraderSZ explains below:

With Bitcoin investors taking profits as suggested by TraderSZ, it may be tough for BTC to reach higher levels.

Historical analysis points to a new Bitcoin bottom

Bitcoin is currently below its 200-week moving average and according to independent market analyst Rekt Capital, Bitcoin price may have already hit its macro bottom according to historical data. Historically the “Death Cross” level shows a $23,500 bottom.

While traders and technical analysis are not known for accurately predicting how long a bull or bear market might last, independent market analyst HornHairs cited historical data from 2015 to estimate how long it will take for Bitcoin to hit a new all-time high.

The bull market from 2015 to 2017 lasted for 1064 days, matching with the 2018 to 2021 bull market which lasted the same number of days. If traders match the bear market that followed between 2017 to 2018 and 2021 to the current market, it would take 1,001 days until Bitcoin reaches a new all-time high.

Despite the current conditions and the strength of the current price breakout, Bitcoin has proven many technical analysts wrong in the past. Risk-averse traders might consider keeping an eye out for increased trading volume at higher prices as an indicator of whether Bitcoin is finally back in a bull market.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

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Ava Labs Partners With Amazon Web Services to Accelerate Blockchain Adoption, AVAX Jumps 16%

Ava Labs Partners With Amazon Web Services to Accelerate Blockchain Adoption, AVAX Jumps 16%Ava Labs, the team behind the layer one (L1) smart contract platform network Avalanche, has partnered with Amazon Web Services (AWS), according to an announcement made on Jan. 11, 2023. Founder and CEO of Ava Labs, Emin Gün Sirer, said the collaboration was a “big deal” and, in comparison with other blockchain announcements that involved […]

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Flare (FLR) airdrops 15% of total supply to XRP holders before correcting by 76%

After a 2-year wait, the layer-1 Flare blockchain has finally followed through and sent its tokens to those who held XRP at the time of the snapshot.

The Flare (FLR) token airdrop started on Mon., Jan. 9, nearly two years after a snapshot of Ripple (XRP) holders took place on Dec. 12, 2020. The FLR airdrop was distributed at a ratio of 1.0073 FLR per 1 XRP and the initial distribution saw 15% of the total supply released to the community.

A total of 28.5 billion FLR were distributed based on this methodology and according to Flare’s tokenomics, 58.3% of the total genesis FLR supply will be distributed over 36 months.

Flare initial token distribution allocation. Source: Flare

What is Flare?

Flare is a Layer-1 blockchain with an oracle system aiming to boost interoperability amongst decentralized applications (DApps) and blockchains. While the token only recently launched, the protocol launched its mainnet on July 11, 2022. To date, the Flare mainnet has already processed over 70 million transactions with over 500,000 unique wallets.

Flare network block explorers. Source: Flare

FLR follows the path of most airdrops

According to data from CoinGecko, FLR token seemingly started trading on Jan. 9, at $0.05 amidst low liquidity on MeXC exchange. After the launch, the token soared to $0.15 as exchanges like Binance, OKX and Kraken started trading the airdropped token.

Shortly after the increased liquidity arrived from more centralized exchanges (CEX) FLR token price began to crash. At the time of writing, FLR price has pulled back by 76% to $0.02 and its 24-hour trading volume sits slightly below $50 million.

While the airdrop provided long-awaited FLR tokens at no cost to XRP holders, the outcome of immediate selling is routine for most airdrops. Proof of real success will be whether the network sees a sustained uptick in the use of its layer-1 and interoperable oracle use case.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

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Bonk token goes bonkers as traders chase after high yields in the Solana ecosystem

Traders are piling into BONK, boosting its price by triple-digits in the last 24 hours and possibly hinting at a trend reversal in Solana price.

Bonk, a meme token modeled after Shiba Inu (SHIB) that launched on Dec. 25, is skyrocketing and some traders believe the token’s trading volume is potentially driving Solana’s (SOL) price up. Over the past 48 hours, SOL price has gained 34%, and in the past 24 hours, Bonk has climbed 117%, according to data from CoinMarketCap. While the wider crypto market remains suppressed, traders are hoping that Bonk could present new opportunities during the downturn. 

According to the project’s website, Bonk is the first dog token on the Solana blockchain. Initially, 50% of the token supply was airdropped to Solana users with a mission to remove toxic Alameda-styled token economics. The airdrop resulted in more than $20 million in trading volume according to the Solana decentralized exchange Orca.

High yield returns

Liquidity providers (LPs) stand to benefit from interacting with Bonk, and on Jan. 4, LPs are earning over 999% APR, which is much higher than the popular SOL/USD Coin (USDC) pairing.

Liquidity provider returns on Orca. Source: Orca

While high yields do not always stay high, the current rates show large market demand for Bonk. In addition to the increase in demand, Bonk also burned 1 billion of supply on Jan. 3.

Solana (SOL) bounces alongside Bonk

Blockchains like Solana benefit from increased usage. After the FTX collapse, Solana saw multiple projects leaving the ecosystem. On Jan. 4, Solana saw an 18.6% increase in 24-hour fees and a 15.8% increase in 24-hour daily active users.

Solana fees and daily active users. Source: TokenTerminal

In addition to fees and daily active user increases, SOL price rallied above $14 on Jan. 4 for the first time since Dec. 14. Some crypto market participants are attributing Bonk’s growth to Solana’s price action.

While Bonk is merely a meme token, the increasing demand is a positive sign for the Solana blockchain. This is a sign that Vitalik Buterin may get his wish that Solana gets a “chance to thrive.”

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

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