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CME Bitcoin derivative traders had ‘paper hands’ as BTC broke $55K — Report

Traders wound up their long Bitcoin derivatives contracts ahead of the October price rally, ignoring solid on-chain fundamentals.

Bitcoin (BTC) derivatives traders on the Chicago Mercantile Exchange (CME) missed out on incredible profits as BTC’s spot price smashed through $55,000 this week.

Retail investors reduced their long exposure across the Bitcoin futures and options markets in late September, according to data shared by Ecoinometrics. The amount of open short positions also climbed, indicating that derivative traders anticipated Bitcoin’s price to drop, as shown in the chart below.

CME Bitcoin derivatives — retail traders. Source: CFTC “Commitments of Traders” report, Ecoinometrics

The data was taken on Sept. 28, when BTC price had fallen below $41,000 on Coinbase — down almost 23% from its month-to-date high near $52,950. The drop surfaced in the aftermath of China’s decision to ban all kinds of crypto transactions.

“Most likely, this dip is due to a mix of traders not rolling their long positions to the October contract and some outright liquidating when BTC looked like it was going to drop below $40k last week,” said Nick, an analyst at Ecoinometrics.

“Regardless, the overall picture is that the futures traders lack conviction.”

“That’s paper hands 101,” the analyst noted.

Smart money

Institutional investors in the CME Bitcoin futures market also followed retail sentiment as they reduced their long exposure in the market. But, on the other hand, their short positions climbed.

CME Bitcoin derivatives — smart money. Source: CFTC “Commitments of Traders” report, Ecoinometrics

With CME options traders convinced that Bitcoin price would drop, the number of puts — an implicitly bearish bet on Bitcoin’s price — turned out to be almost twice the size of the calls, or bets on potential Bitcoin price gains.

CME Bitcoin options — puts vs. calls open interest. Source: Ecoinometrics

Traders’ position distribution made $40,000 the most sought-after strike price target.

On the other hand, some options traders bet that the spot Bitcoin price would hit $60,000 by the end of October. Additionally, analyst Crypto Hedger highlighted that Bitcoin options expiring on Nov. 26 show bulls’ sentiment skewed toward the $80,000-strike target.

Buy/sell volume in the last 24 hours for Nov. 26 Bitcoin options contract. Source: Laevitas, Crypto Hedger

“At this current growth pace, Bitcoin has formed very strong support at the $50,000 price point, and short-term traders may also need to watch out for the key resistance level around $56,000,” said Konstantin Anissimov, executive director of CEX.IO, adding:

“A break below or above these levels can stir another cataclysmic price reversal or a massive run toward $60,000 in Q4.”

Bitcoin supply squeeze in play

On-chain data shared by Ecoinometrics also showed a higher level of Bitcoin withdrawals from all the crypto exchanges.

In detail, Bitcoin’s 30-day net exchange flow has been rising since July 2020, as noted in the color-coded chart below, with blue and red indicating extreme outflow and inflow, respectively.

Bitcoin rolling net exchange flow. Source: Coinmetrics

Ecoinometrics noted that the amount of Bitcoin currently leaving exchanges is higher than it was in the previous four-year halving cycles.

Bitcoin rolling net exchange inflow (second halving vs. third). Source: Coinmetrics 

Meanwhile, traders see the reduction in Bitcoin’s supply on exchanges, with increasing “hodling” activity, as further catalysts for a liquidity crisis and more price upside.

Related: Bitcoin ‘heavy breakout’ fractal suggests BTC price can hit $250K–$350K in 2021

“Back then there were indeed periods of net outflows but in terms of size they look much less dramatic than what we have right now,” Ecoinometrics highlighted, adding:

“That’s another sign that we are on course for a liquidity crisis which could drive Bitcoin’s value much higher than it is right now.”

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk, and you should conduct your own research when making a decision.

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Bitcoin ‘heavy breakout’ fractal suggests BTC price can hit $250-$350K in 2021

The analogy appeared in anticipation that Bitcoin could post a 2017-like bull run, in which the price rose by more than 1,900%.

Bitcoin (BTC) has the potential to push its prices to between $250,000 and $350,000 by the end of 2021, a long-standing fractal suggests.

First spotted by pseudonymous analyst Bit Harington, the bullish setup drew its inspirations from Bitcoin's secular bull runs every time after halvings when the miner block reward gets cut in half. Analysts perceive the halving as a bullish event, which reduced the supply of newly mined BTC. 

Harington reminded that Bitcoin's prices surged by more than 600% after the first two halving events in 2012 and 2016 when measured from a so-called resistance/support (R/S) line, as shown in the chart below.

Bitcoin price performance after the first two halving events. Source: BuyBitcoinWorldWide, PlanB, and Bit Harington

The line represented a barrier during the period of price uptrend. Traders tested it for a breakout multiple times before successfully breaching it to log a new record high. When prices started correcting, they eventually bottomed out near the same line.

In 2020-2021, Bitcoin underwent a similar upside trajectory, bouncing from below $4,000 to rising to above $60,000. Again, Harington highlighted the $60,000-level as the same R/S line that kept trades from logging a clear bullish breakout.

The analyst hinted that Bitcoin would break above it to soar towards a new record price level.

Cointelegraph Markets analyst Michaël van de Poppe reacted to Harington's fractal theory, adding that it would lead the Bitcoin prices to the $250,000-$350,000 range.

He noted, however, that the massive run-up could also prompt a brutal correction that can push Bitcoin prices back toward $65,000, right near the Harington's S/R level of $60,000.

Do fundamentals agree?

Bitcoin skyrocketed after crashing below $4,000 in March 2020 primarily due to the global central banks' loose monetary policies to curb the economic aftermath of the Covid-19 pandemic. The cryptocurrency closed the year at around $30,000, as retail and institutional investors woke up to its safe-haven narrative against a falling U.S. dollar and rising inflation fears.

So far in 2021, the price of Bitcoin topped around $65,000 before correcting lower below $50,000. At its year-to-date (YTD) low, the pair traded for $29,301 on the Coinbase exchange. Its losses were led by a sudden ban on all crypto activities in China (including mining) and Elon Musk's alarming tweets over Bitcoin's booming carbon footprints.

Bitcoin price performance throughout the history. Source: TradingView.com

BTC balance on exchanges drops to fresh lows

The cryptocurrency held prices above $30,000 as its reserves across exchanges dropped significantly.

Blockchain data analytics service CryptoQuant reported that Bitcoin's balances across the crypto trading platforms slipped to around 2.37 million BTC last week, its lowest in more than a year.

Bitcoin reserves across all exchanges. Source: CryptoQuant

A decrease in Bitcoin reserves represents traders' intentions to hold the cryptocurrency instead of trading it for altcoins and fiat currencies.

Bitcoin hashrate has nearly recovered

Bitcoin's recovery from below $30,000 to almost $50,000 also coincided with its V-shaped hashrate recovery.

Related: BTC price falls back to $47K as weekly close neatly tracks Bitcoin futures gap

For the uninitiated, the Bitcoin network's computation power plunged to 84.79 million terahashes per second (TH/s) in early July from 180.66 million TH/s in late May. The drop surfaced as many miners responded to China's crypto crackdown by either shutting down their facilities or moving their operations abroad.

The seven-day average Bitcoin hashrate in recent history. Source: Blockchain.com

But the network recovered more than half of its lost hashrate, hitting 136.92 million TH/s on Sept. 18, indicating that China's direct ban did not have a prolonged effect on Bitcoin's mining sector. 

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

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Bollinger Bands creator warns Bitcoin bulls as BTC price struggles below $50K

"Watch carefully, maybe take some profits or hedge a bit," advises John Bollinger.

Bitcoin (BTC) prices have recovered by more than 60% to $47,486, after bottoming out below $30,000 on July 20, triggering anticipations of an extended bull market toward $100,000. But to John Bollinger, a celebrated contributor to the field of financial analysis, investors should refrain from buying the benchmark cryptocurrency at current prices.

Bollinger advised in his Tuesday tweet that investors could secure their Bitcoin profits or build a hedge position elsewhere to offset potential BTC/USD decline risks. Explaining his cautious outlook, Bollinger noted that "aggressive traders can think about putting out some shorts," which, in turn, could push the Bitcoin prices lower in the coming sessions.

"Hodlers can look [to] add at lower levels if we see them. No confirmation yet, just be on the alert."

Bitcoin could hit $41,000?

The statements appeared as Bitcoin underwent a correction after reclaiming its three-month high of $50,505. In doing so, the cryptocurrency fell up to 6.70% to $47,122, signaling a strong bearish presence around the $50,000 price area.

Scott Melker, the author of the Wolf Den Newsletter, expected Bitcoin to fall towards the $41,000-$42,000 range in the coming sessions. Nevertheless, the independent market analyst asserted that such a pullback would still be healthy—a "heavy load up zone" that would lead to a price rebound.

BTC/USD weekly setup by Scott Melker. Source: TradingView.com

Another pseudonymous market analyst CryptoHamster shared a similar bearish outlook but based his analogy on a technical pattern called Ascending Channel. The pseudonymous analyst illustrated Bitcoin testing the Channel's support trendline for a potential breakout move to the downside. It tweeted:

"Bitcoin could have one more bounce here (chart below) or there will be a breakout to the downside. And it will define the mid-term trend to a great extend."
Bitcoin ascending channel setup by CryptoHamster. Source: TradingView.com

The Ascending Channel short target in the CryptoHamster's BTC/USD chart was below $41,000. 

Bollinger's technical indicator, dubbed Bollinger Bands, spotted Bitcoin holding above the 20-day simple moving average as interim support at around $46,750. Nonetheless, a break below the so-called signal line risked sending BTC/USD toward the lower Bollinger band around $42,670, as shown in the chart below.

Bitcoin daily price chart featuring Bollinger Bands setup. Source: TradingView.com

The $100K Bitcoin predictions

Bitcoin's correction from $50,000 does not necessarily mean the beginning of a bear market, especially as analysts continue to project six-figure valuations for the cryptocurrency.

For instance, Lyn Alden, the founder of Lyn Alden Investment Strategy, told Business Insider that Bitcoin has an incredible potential to reach $100,000 by next year, stating that the cryptocurrency is "still in kind of the early-to-mid stage of its long-term trajectory."

Related: Options traders aim for $100K Bitcoin by the end of 2021, is there a chance?

Bloomberg Intelligence's senior commodity strategy Mike McGlone also envisioned the same price target for Bitcoin in hopes that it would attract capital from the gold market. Iqbal Gandham, vice president of transactions at Ledger, also said Bitcoin would surge to $100,000 in the second half of 2021. He told MarketWatch:

“With all the movement, whether it be noise around ETFs or countries adopting BTC as legal tender, one could easily assume that this is where BTC would rest by the end of the year."

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

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Bitcoin 2021 attendees’ positive COVID-19 tests are going viral

Social distancing, mask mandates, and proof of vaccination were not required to attend the event.

Some of the attendees who attended the Bitcoin 2021 event in Miami last weekend have tested positive for Covid-19 after returning home from the conference, leading to a wave of negative media coverage and social media speculation it could turn into a “super spreader event.”

Arcane Research CIO, Eric Wall, was among those to contract the virus, tweeting earlier today that he underwent a CT-scan after suffering from a “high fever” and “chest pains,” with medical staff having suspected he may have a blood clot in his lungs. No blood clot was found, with Wall having been discharged from hospital and returned home.

Luke Martin of automated trading software developer, Coinist, also admitted to testing positive for Covid-19.

According to CNBC, at least 12,000 people attended the event — which did not require proof of vaccination or enforce a mask mandate. The event lasted for three days at Miami's Mana Wynwood convention center, cramming into crowded auditoriums while social distancing was not enforced.

The event was Miami's first major conference since the beginning of the pandemic. According to a New York Times report lines to enter the building “stretched for more than a mile.”

Miami mayor and Bitcoin proponent, Francis Suarez, spoke at the event, and was introduced on-stage as “probably the most irresponsible politician in all of America,” and “the mayor of the meccas of freedom.”

Social media reports have estimated the number of attendees and positive tests may be higher than mainstream reports. Influencer “Mr. Whale,” told his roughly 235,000 followers that “dozens” of conference-goers have since tested positive, estimating the event could have seen more than 50,000 attendees.

A screenshot of an image retweeted by Bitcoin 2021 organizer Dylan LeClair that scathingly dismissed the U.S. Centers for Disease Control and Prevention’s (CDC) Covid-19 Vaccination Record Card system has circulated on social media.

Bitcoin 2021 was not the first crypto conference to host Covid-19 transmissions, with TorusLabs’ co-founder, Zhen Yo Yong, urging attendees of the Ethereum Community Conference in Paris and ETHLondon hackathon in early 2020 to get tested when he was diagnosed with coronavirus after participating in the events.

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Canadian prime minister’s sibling goes bananas for Dogecoin at Bitcoin 2021

"I say keep an open mind towards the Doge and Doge-consciousness,” said Kyle Kemper.

The big crypto news out of Miami over the weekend may have been El Salvador President Nayib Bukele’s decision to proceed with making Bitcoin legal tender, but another figure connected to a world leader made his own mark in supporting Dogecoin.

In an exclusive interview with Cointelegraph at the Bitcoin 2021 conference, Kyle Kemper, the 37-year-old half brother of Canadian prime minister Justin Trudeau resplendent in a banana costume, said he was launching a Dogecoin (DOGE) project. The initiative, called the “Million Doge Disco” is, according to Kemper, a combination of the smartphone game Pokemon Go, the popular 1990s digital pet craze Tamagotchi, and nonfungible tokens.

“There are honestly Doge floating around us,” said Kemper, gesturing with his hand around the conference floor. “I suggest that you perhaps switch some crypto into some Doge for the pure reason to give it away.”

The Doge enthusiast, who has been an outspoken Bitcoin (BTC) and crypto proponent, went on to say children likely found the meme-based cryptocurrency more appealing than BTC. As part of his promotional work at the conference, he was “giving the kids Dogecoin” through stickers with addresses:

“Doge is a wonderful intro currency, so it’s really easy for kids to get started with Doge [...] I say keep an open mind towards the Doge and Doge-consciousness.”

Kemper also compared BTC creator Satoshi Nakamoto to Jesus, saying he was “no longer with us, but he walked on water” and “one day perhaps” may rise from the dead to greet those in crypto.

“Not yet,” said Kemper repeatedly when asked about the timeline for Satoshi's speculative return. “Not yet.”

Watch the full interview between Kemper and Cointelegraph here.

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What to expect from the Miami Bitcoin 2021 conference

Miami is about to host thousands of attendees for the Bitcoin 2021 conference — here are some of the major appearances and talking points to watch for.

From Thursday through Saturday, a throng of crypto faithful will gather at the Mana Wynwood Convention Center in Miami for the Bitcoin 2021 conference. 

Bitcoin 2021 perhaps holds even greater significance than usual, as participants can gather in a physical location after COVID-19 restrictions forced many other crypto conferences to go virtual.

This year’s conference boasts a stellar cast of members of Congress, celebrities, cryptographers, CEOs and other crypto proponents, with the total attendance anticipated to exceed 50,000 people.

Some of the personalities expected at the event include Miami Mayor Francis Suarez, Bitcoin (BTC) permabull and MicroStrategy CEO Michael Saylor, Twitter’s Jack Dorsey and the Winklevoss twins — Cameron and Tyler Winklevoss — among others.

Mayor Suarez recently revealed that he bought Bitcoin after the United States Senate passed its $1.9 trillion stimulus bill back in March.

Bitcoin 2021 will also see pro-crypto government officials like Wyoming Sen. Cynthia Lummis as well as former heads of U.S. financial watchdogs like Chris Giancarlo and Brian Brooks. Giancarlo is a former chairman of the U.S. Commodity Futures Trading Commission, while Brooks recently served as the acting comptroller of the currency.

Saylor, the Winklevoss twins and Anthony Pompliano will headline the two fireside chats on Friday, while Galaxy Digital’s Mike Novogratz, Paxos CEO Charles Cascarilla, Square Crypto’s Steve Lee and freelance journalist Aaron van Wirdum will appear in fireside chats on Saturday.

On topics related to scalability, Zap CEO Jack Mallers will talk about businesses utilizing the Lightning Network, while the MIT Bitcoin Project’s Jeremy Rubin will appear in a panel titled “Bitcoin is DeFi.”

With the recent criticisms of Bitcoin mining, it is perhaps unsurprising to see a few panels dedicated to the subject, with titles like “The Moral Case for Bitcoin” and “Bitcoin Mining Fixes Our Energy Problems.”

Other panels planned for the event will explore topics concerning on-chain analytics, proof of reserves and banking the unbanked.

Cointelegraph's editorial team will be on sight to provide the latest updates on the biggest events as well as to conduct interviews and even livestreams through YouTube and Twitter. Stay tuned!

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