Bloomberg strategist explains why 30-year US bonds have ‘bullish implications’ for Bitcoin

August 23, 2021 Coin Telegraph

Bitcoin

Long-dated US Treasury yields are slumping ahead of the Jackson Hole meeting.

Despite Bitcoin (BTC) slipping back below $50,000, more and more investors are likely to move their capital into Bitcoin and gold markets in the second half of 2021 (H2), asserted to Mike McGlone on Aug. 23, the senior commodity strategist at Bloomberg Intelligence.

The financial analyst cited the consistently lower yields offered by the 30-year US Treasury note behind his upside analogy. He noted that if its rate of return persists below 2%, it could enhance the price discovery stage for Bitcoin while posing a competitive advantage for traditional safe-haven assets like gold.

#Bitcoin, #Gold & Long #Bonds: Three Amigos for 2H Appreciation? The U.S. Treasury 30-year yield sustaining below 2% has bullish implications for gold and Bitcoin. Unlike the stock market, the old analog store-of-value and new digital version share substantial corrections.. pic.twitter.com/UYanE4sPSb
— Mike McGlone (@mikemcglone11) August 23, 2021

"Unlike the stock market, the old analog store-of-value and new digital version share substantial corrections," McGlone added, referring to the little reversion in the S&P 500 index in the first half of 2021 (H1) that increases its potential to correct lower in the H2.

In turn, it arranges new capital for other markets with extreme upside potential, such as Bitcoin.

*Bitcoin, gold, and US bonds index versus S&P 500 total return index. Source: Bloomberg Intelligence*

"The S&P 500 up or down 10% in 2H offers a simple binomial model," wrote the Bloomberg analyst in a research note in July.

"If up, it would be about 3x the annual norm since 1928 and buoy the Bloomberg Galaxy Crypto Index above the 1H gain of about 80%. If down, bond yields would likely follow and Bitcoin may be a primary beneficiary."

Bitcoin to reach new record high

The Federal Reserve's unprecedented interference in the bond market after the March 2020's market crash drove rates down. Institutional investors that ideally look for 5% annual yields from the bond market to curb inflationary pressures now grappled with short-term bonds, some of them offering yields below zero.

Meanwhile, yields on the longer-dated Treasury also fell to record lows. That forced investors to look for alternatives in the riskiest parts of the financial markets—higher-returning, non-debt investments like Bitcoin.

"It was the breach of [the 2%] threshold in 2020 that preceded the risk-off swoon and laid the foundation for Bitcoin’s move toward new highs this year," the Bloomberg research noted.

*30-year US Treasury yield versus Bitcoin price. Source: TradingView.com*

Tapering and Jackson Hole

McGlone's statements on bonds and Bitcoin correlation come as Jerome Powell, the chairman of Federal Reserve, prepares to deliver a speech at the Jackson Hole summit this week, typically one of the most influential economic events.

The Fed's efforts to reduce its $120 billion per month bond-buying policy expects to be a dominant theme during the (virtual) Jackson Hole meeting. Investors will watch Powell's words for any clues on how and when the U.S. central bank would begin its tapering program.

In their July 27-28 meeting, Fed officials agreed to start unwinding their bond-buying policy over a sanguine outlook for economic growth and the jobs market.

Nonetheless, the 30-year Treasury yield remained lower after the news, with reports surfacing that investors were still expecting economic downturns owing to the spread of the Covid-19 Delta variant.

"Many clients have not particularly understood how rates markets have moved, and that has brought in a degree of caution you wouldn’t normally see," Guneet Dhingra, head of US interest rate strategy at Morgan Stanley, told the Financial Times.

After the Fed outlook on Aug. 18, Bitcoin price rose by more than 14% to reach their three-month high of $50,784.

*Bitcoin daily price chart. Source: TradingView.com*

The BTC/USD exchange rate slipped below $50,000 on Monday on profit-taking sentiment. At its lowest, the pair's bid was $49,369.

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.

Bitcoin slides with S&P 500 as Fed signals tapering $120B monthly bond purchases

August 19, 2021 Coin Telegraph

Bitcoin

The benchmark cryptocurrency retreated alongside risk-on markets as investors shifted their exposure to the U.S. dollar.

Bitcoin (BTC) prices briefly fell below $44,000 on Thursday as the United States Dollar strengthened after the U.S. Federal Reserve policy minutes revealed its intentions to limit its bond-purchasing program this year.

Bitcoin risks $45,000 becoming new resistance

The spot BTC/USD rate dropped 1.71% to a new week-to-date low of $43,955. The pair’s plunge appeared as a part of a technical correction that started after it had reached a three-month high of $48,176 on Saturday, following a 64.42% price rally.

*Bitcoin daily price chart. Source: TradingView*

Bitcoin’s latest price decline also surfaced in line with a similar market bias on Wall Street. For instance, the benchmark S&P 500 index lost 47.81 points, or 1.1%, dropping to 4,400.27 during Wednesday’s final hours of trading.

Similarly, the Dow Jones and the Nasdaq Composite also plunged 1.1% and 0.9%, respectively. In addition, CNBC’s pre-market data revealed that futures tied to Wall Street indexes dropped on Thursday, hinting that the markets will likely continue their declines after the New York opening bell later on Thursday.

Over the past month, #Bitcoin and the #SP500 have been correlating quite strongly, and that includes the mild decline over the past couple of days. Meanwhile, the inverse correlation between $BTC and #gold's price has calmed down significantly. https://t.co/dvQUHVrYEH pic.twitter.com/lpwJBvkpbx
— Santiment (@santimentfeed) August 19, 2021

On the other hand, the U.S. dollar index (DXY) benefited from declining risky markets. The index, which measures the greenback’s strength against a basket of top foreign currencies, surged 0.39% to a six-month high of 93.50 before correcting lower by modest margins.

*U.S. dollar index daily chart highlighting an inverse head and shoulder setup. Source: TradingView*

Tapering alert

The U.S. Federal Reserve’s July 27–28 meeting, released Wednesday, showed an emerging consensus to unwind its $120-billion monthly purchases of Treasury and mortgage-backed securities.

Most central bank officials agreed that the U.S. economic recovery is on the right path, which is an appropriate reason to reduce the pace of asset purchases. But they did not reveal when they should begin the tapering, with only three remaining Federal Open Market Committee meetings left to attend this year.

Officials also agreed that scaling back asset purchases would position them to raise interest rates should the economic recovery persist as anticipated. But they said that they want to see stronger evidence that the labor market has recovered from the aftermaths of the COVID-19 pandemic, the minutes revealed.

On inflation, the minutes showed Fed officials anticipating a temporary burst. They highlighted that their preferred gauge of inflation, after excluding volatile food and energy categories, was at 3.5% in June — a 30-year high — but anticipated declines by calling the upswing in consumer prices transitory.

Bullish exhaustion ahead?

In detail, excessive bond-buying ended up sending U.S. debt yields to a low of 0.66% in 2020. Even the bounce back recorded at the beginning of 2021 kept the yields near their record lows. The trend was the same across the globe, wherein the amount of debt offering negative yields recently stood at $16.5 trillion, a six-month peak.

*Long-term government bond yields are declining across developed economies. Source: FRED*

The lower rate of returns has sparked a series of rotations in the equity market, with indexes logging record highs. The S&P 500 rallied 19.01% year-to-date to hit a lifetime peak of 4,480.26 points, while the Dow Jones jumped 16.30% year-to-date to reach an all-time high of 35,369.87 points.

Bitcoin, which emerged as a safe-haven alternative to the U.S. dollar and gold in 2020, also rose alongside the Wall Street index. In 2021, it has penned a record high near $65,000, with analysts crediting the Fed’s loose monetary policies as one of the leading catalysts behind its price rally.

The biggest helpers for cryptocurrency adoption are central banks. #Bitcoin rises almost in tandem w/the combined balance sheet of the Big3. Combined balance sheet of Fed, BoJ and ECB has risen to almost $25tn. pic.twitter.com/TB8FqeSIqd
— Holger Zschaepitz (@Schuldensuehner) August 13, 2021

But the biggest question remains of whether or not tapering will rotate capital out of the markets, which boomed during the period of quantitative easing, especially now Bitcoin that is sitting atop over 1,000% in profits following the Fed’s loose policy introduction in March 2020.

Jon Ovadia, founder of South Africa-based crypto exchange Ovex, noted that a declining cash flow from the Fed’s coffers would likely halt the growth of Bitcoin and similar risky assets in the near term.

“The factors that support the growth of Bitcoin, in particular, goes beyond just the Fed’s interference in keeping the economy healthy,” he explained, adding:

“However, on the macroeconomic front, Bitcoin investors will have to factor in the prospective impact and hang on to other fundamentals that abound in the crypto market to keep prices at record levels.”

Bitcoin will have refreshed record highs by Q1/2022

James Wo, founder and CEO of Digital Finance Group, called the latest price declines in Bitcoin and the equity market “reactionary” in nature. But he stressed that risk-on assets would continue their upward momentum in the long term due to inflationary pressures.

“Nominal inflation will take time to get back to levels seen before the pandemic,” he said.

“I continue to believe that we are still on track to reach all-time highs by Q4 2021–Q1 2022.”

Bitcoin mining metric that has predicted every big BTC rally since 2020 is flashing again

August 18, 2021 Coin Telegraph

Bitcoin

The fractal setup appeared at the beginning of the Bitcoin price rallies in January 2019, January 2020, March 2020 and December 2020.

A Bitcoin (BTC) mining indicator that has preceded several major BTC price rallies is flashing again.

Blockchain analytics platform Glassnode spotted a golden cross between the 30-day and 60-day moving averages of Bitcoin's hash ribbon. In theory, such a crossover indicates that the price momentum is switching from negative to positive.

*Bitcoin hash ribbons. Source: Glassnode*

Hash ribbons are based on Bitcoin’s network hash rate behavior and are designed to tell investors when the price is due to experience upside. In simple terms, they show when Bitcoin becomes more expensive to mine relative to the base cost of mining.

Miners earn less in U.S. dollar terms during Bitcoin price corrections. So, to pay for their operational costs, they sell their newly minted Bitcoin to raise capital. They also tend to shut down machines to reduce their operational costs, leading to hash rate declines in the Bitcoin network.

But hash rates recover later on thanks to Bitcoin’s automatic difficulty readjustments. That reduces the cost of mining and makes it cheaper for less-efficient miners to enter the fray. In doing so, miners also accumulate coins, thereby ending the capitulation period.

Therefore, hash ribbons demonstrate miners' sentimental switch from capitulation to accumulation. That provides traders a method to determine potential price bottoms in the spot market.

Hash ribbon fractals predict Bitcoin bull runs

Recent history has shown that Bitcoin's price has followed the hash ribbon signals.

For example, the chart below illustrates multiple instances in which a crossover between the 30-day (green) and the 60-day (blue) hash ribbon moving average has prompted Bitcoin bulls to pursue upside moves.

For instance, the so-called supply squeeze event in December 2020 coincided with the green-blue moving average crossover. The closing bid for Bitcoin that month was $28,990, which surged to $62,971 on April 14.

*Bitcoin hash ribbon crossovers in recent history. Source: Glassnode*

Similarly, the bear capitulation of 2019, the January 2020 mini-bear cycle, March 2020's coronavirus-induced crash and May's halving event happened alongside the green-blue moving average crossover. Each was followed by an upside move in the Bitcoin market.

The recent bullish crossover appeared as a part of what Glassnode called the "Great Migration Recovery." In detail, China's crackdown on the crypto sector in May forced regional miners to discontinue operations. Some decided to shut down completely under Beijing's regulatory watch, while others moved their mining operations abroad .

The period of China's mining community exodus saw Bitcoin's hash rate plunge from 180.66 million terrahashes per second (TH/s) on May 11 to 84.79 million TH/s by July — a more than 53% drop.

But as of Aug. 17, the hash rate had recovered to 119.12 million TH/s, as miners moved their operations to Canada, Kazakhstan, Russia and the United States.

"Historically, the 30D hash-ribbon crosses above 60D when the worst of the mining impact is over, and recovery is underway," noted Glassnode.

Bitcoin was trading near $45,200 at the time of writing, up 55% from its July 20 low of $29,301.

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.

Bitcoin ‘sell the rally’ indicator flashes again as BTC price breaks below $45K

August 12, 2021 Coin Telegraph

Bitcoin

An on-chain indicator, notorious for spotting fake bullish breakouts during downside corrections, flashes again.

A Bitcoin (BTC) on-chain indicator that spotted dead cat bounces during the yesteryear bearish market corrections has flashed again in August 2021.

Dubbed as "Bitcoin: Short Term Holder NUPL," the indicator takes into account the unspent transaction output, or UTXO, of BTC transactions not more than 155 days old. In doing so, it attempts to determine whether or not an investor is profitable within 155 days of purchasing and holding Bitcoin.

Therefore, if the NUPL, which stands for Net Unrealized Profit/Loss, returns a reading below zero, it means investors are making a loss on their Bitcoin investments. Conversely, an NUPL above zero shows that investors are making a profit.

Glassnode reported Thursday that the Bitcoin NUPL for short-term investors recovered back above zero, signifying their profitable state for the first time since May 2021's crypto market crash. Meanwhile, the blockchain analytics platform also signaled fears of potential sell-off, citing fractals from 2014-15, 2018, and March 2020 bear cycles.

*Bitcoin short-term holder NUPL chart. Source: Glassnode*

In detail, short-term Bitcoin holders earlier used the recovery rallies during corrections to secure interim profits.

The price action from 2014-15 bearish session shows BTC/USD resuming its downside correction despite a 100% rebound. Similarly, in 2018, a 97.41% upside retracement did little in securing the market from the prevailing bearish bias.

*Bitcoin price recoveries did not last during the 2014-15 and 2018 bearish cycles. Source: TradingView.com*

The latest upside recovery in 2021 came after Bitcoin prices crashed from circa $65,000 to around $29,000. The cryptocurrency rallied to $46,787 on the Bitstamp exchange following a major rebound afterward—a 63.59% jump.

Bitcoin corrected lower again on Thursday, falling below its psychological support level of $45,000. At its intraday low, the cryptocurrency was changing hands for $44,100.

*BTC/USD price performance in recent history. Source: TradingView.com*

The dissenting bullish case

Glassnode noted that such "rapid recoveries" are common in two cases: either bear market relief rallies or disbelief phases of bull markets.

Therefore, in saying so, the blockchain analytics platform did not rule out the possibility of an extended bull run, such as the one seen during the upside booms of 2013, 2019, and 2020.

More evidence corroborating the bullish outlook came from Glassnode's report published earlier this week. The platform spotted a decline in short-term holders in line with a rise in long-term holders, insomuch that the Bitcoin supply held by long-term holders reached a new all-time high of 82.68% of all the coins in circulation.

Meanwhile, the coin possessed by short-term holders dropped to 25% of the net Bitcoin supply in ciculation, suggesting a run-up in holding behavior.

*Long and short term holder supply ratio. Source: Glassnode*

Historically, when the short-term holder ratio drops to 20%, it leads to a supply squeeze scenario, i.e., when coins in circulation fall short of the current demand.

“This is extremely similar to the volume of coins held by [long term holders] in October 2020 before the primary bullish impulse started,” Glassnode analysts wrote, adding:

"Whilst the supply squeeze based on the [short-term holder] Supply Ratio is not yet at 20%, there are numerous indicators and trends in play that suggest it may hit it in mid-September (but that the conditions for a supply squeeze are already in play)."

Bitcoin was trading around $44,200 at the time of this writing.

Large hodlers accumulate Bitcoin below $50K as BTC transactions over $1M soar

August 10, 2021 Coin Telegraph

Bitcoin

The dominance of Bitcoin transactions of values above $1 million has doubled year-over-year, hinting at a rising institutional involvement in the cryptocurrency space.

Institutions have not left the Bitcoin (BTC) market even in the face of a 50%-plus bearish correction earlier this year, shows data provided by Glassnode.

The blockchain analytics platform reported on Monday that the dominance of Bitcoin transactions exceeding $1 million has surged twofold since September 2020 — from 30% to 70% of the total value transferred.

Since retail investors do not typically engage in large-volume transactions, Glassnode guesses that the institutional investors might have been behind the spike in the $1 million–$10 million transaction group.

Moreover, the platform noted that the Bitcoin network processed the said bulky transactions as the BTC/USD exchange rate traded lower from $65,000 to below $30,000 in the second quarter of 2021.

*Bitcoin transfer volume breakdown of transactions above $1 million. Source: Glassnode*

“As the market traded down to the lows of $29k in late July, the $1M to $10M transaction group spiked markedly, increasing dominance by 20%,” wrote Glassnode in a report from Monday.

“This suggests that these large-size transactions are more likely to be accumulators than sellers and is again, fairly constructive for price.”

Small transactions lose dominance

Glassnode provided additional volume data that showed a structural decline in small-size transaction dominance.

In detail, transactions of less than $1 million fell by half — from 70% in September 2020 to 30%–40% dominance in March–May 2021. The declines suggest that small investors capitulated their Bitcoin holdings to secure early profits.

During the mid-May crypto market crash, the dominance fell to nearly 20% but recovered back to the 30%–40% range as Bitcoin’s price consolidated above the $30,000 support level. It remained within the said percentage range during the recent run-up to levels above $46,000.

*Bitcoin transfer volume breakdown of transactions below $1 million. Source: Glassnode*

“[The data] clearly demonstrates a new era of institutional and high net worth capital is flowing through the Bitcoin network since 2020,” Glassnode asserted.

Hodl sentiment returns

More evidence of Bitcoin accumulation came from Glassnode metrics that tracked the hodling behavior of investors.

The “Long and Short Term Holder Supply Ratios” indicator reported that the Bitcoin supply owned by long-term holders (LTH) reached an all-time high of 82.68%. Meanwhile, the short-term holders (STH) supply continued to decline, hitting 20% and suggesting holding and coin maturation in play.

*Bitcoin long and short term holder supply ratios. Source: Glassnode*

Glassnode suggested that when the STH supply ratio reaches 20%, it follows with a major supply squeeze — i.e., a supply shortage that typically drives the underlying asset’s prices higher.

But who will accumulate the remaining 5% of the adjusted supply? A Glassnode metric suggests coins aged between one week and three months represent a large portion of the liquid supply.

*Bitcoin HODL waves for coins aged between 1 week and 3 months. Source: Glassnode*

“We can see that after the uptrend in Q1 (old coin distribution), these age brackets have fallen back to bear market equilibrium level of around 12.5% to 15% of supply,” wrote Glassnode, citing the chart above.

“This downtrend indicates that coin maturation is indeed in play, and that many of the 2021 bull market buyers have stuck around to become strong hand HODLers.”

Bitcoin was trading at $45,930 at the time of writing, down 0.73% from its intraday high.

Ethereum could pave way for $100,000 Bitcoin, Bloomberg analyst asserts

August 9, 2021 Coin Telegraph

Bitcoin

"If Bitcoin were to catch up to Ethereum's performance this year, the No. 1 crypto's price would approach $100,000," believes Mike McGlone, senior commodity strategist at Bloomberg Intelligence.

Ether (ETH) has outperformed Bitcoin (BTC) in terms of year-to-date market performance, rising more than 320% against BTC's 54% returns. But, according to Bloomberg Intelligence senior commodity strategist Mike McGlone, Bitcoin would soon catch up to Ether's gains, which might even push its per-unit price to $100,000.

"If Bitcoin were to catch up to Ethereum's performance this year, the No. 1 crypto's price would approach $100,000," the analyst tweeted on Aug. 9 as BTC price broke above $46,000.

*Bitcoin performance vs Ethereum performance (in 2021). Source: Bloomberg Intelligence*

While McGlone did not dwell on the factors that would have Bitcoin match Ethereum's yearly gains, his earlier report on cryptocurrencies cited a few catalysts that could propel the benchmark crypto's prices to the six-figure club. The report notes:

"About 80% of Bitcoin and Ethereum, the majority of the Bloomberg Galaxy Crypto Index (BGCI) performance comes from the broader perception of the first-born crypto as a global digital-reserve asset, plus accelerating digitization of fintech and the monetary system."

Trillions of dollars waiting on the sidelines

Bitcoin backers believe it can compete with the U.S. dollar to become a global reserve asset. A big reason is the cryptocurrency's fixed supply cap that, to proponents, make it better sound money than the greenback (the Federal Reserve printed $3.1 trillion in 2020 alone).

As a result, Bitcoin closed last year 260% higher, reflecting that investors treated it as a tool against dollar-led inflation.

*Bitcoin price performance through the recent years. Source: TradingView.com*

In its survey earlier in 2021, Goldman Sachs also noted the pent-up demand for Bitcoin among institutional investors, including pension funds, global sovereign wealth funds, and foundations. Nonetheless, even as they had trillions of dollars in reserves, a lack of clear crypto regulations kept accredited investors from putting those funds in the Bitcoin market.

Analysts at Autonomous Capital Management stated that a regulated Bitcoin exchange-traded fund would speed up Bitcoin adoption among institutions. In addition, they stated that while investors treat Bitcoin as a highly volatile asset, its lack of correlation to traditional risk factors will be like music to their ears.

The Autonomous analysts added:

"If we were to assume that Bitcoin gets the same weighting as the current gold weighting in investor’s portfolios, its price would be 2.8x times higher or roughly $112,000."

Ethereum rivalry

Despite its adoption prospects on Wall Street, Bitcoin's dominance has fallen severely after topping out at around 73% in December 2020. It now stands at 47.17%, reflecting that traders have shifted around their investments to other digital assets.

Ethereum, in particular, has become the biggest benefactor of the falling Bitcoin dominance index. Its own dominance in the cryptocurrency industry has climbed from 10.06% in December 2020 to 20.05% at the time of writing.

*Ethereum dominance index has almost doubled in 2021. Source: TradingView.com*

Part of the reason behind Ether's rising dominance has originated from the explosion of non-fungible tokens (NFT), which are digital files whose originality and scarcity can be validated by a public ledger.

In addition, a boom in the decentralized finance space, consisting of lending, borrowing, and other financial services built atop the Ethereum blockchain, has pushed the adoption of Ether among crypto masses.

Ethereum developers are also taking steps to scale the blockchain. On Aug. 5, Ethereum updated its software with a so-called London hard fork with an aim to become a full-fledged Proof-of-Stake protocol in the future.

The update also added deflationary pressures on the supply, with an improvement proposal EIP-1559 bringing a fee reduction feature. On the first day alone, EIP-1559 enabled the elimination of $2 million worth of Ether tokens.

As of Monday, the feature burned about $5.5 million worth of ETH, as per data fetched by the website Ultrasound Money.

McGlone noted that Ethereum's past performance indicates possibilities that it could surpass Bitcoin in terms of market cap by 2022 or 2023. The analyst maintained his $100,000 price target for Bitcoin, nonetheless.

*Ethereum's market cap projected to match Bitcoin's by 2023 tops. Source: Bloomberg Intelligence*

"Though we see Bitcoin on that path, there appears little can stop the process of Ethereum flippening," he said.

To date, Ethereum has surpassed Bitcoin in terms of network transactions and total transaction fees, data from Blockchain Center shows.

No, Bitcoin isn’t entering a 2018-like bear cycle, new data suggests as BTC targets $45K

August 9, 2021 Coin Telegraph

<div>No, Bitcoin isn't entering a 2018-like bear cycle, new data suggests as BTC targets K</div>

2018 Crypto Crash

Even as Bitcoin trades almost 35% below its previous record high of about $65,000, long-term investors have not contributed actively to its decline.

The scale of Bitcoin's (BTC) ongoing downside correction might not be as alarming as it was in 2018, indicates data shared by Glassnode.

The blockchain analytics firm reported that investors who have held Bitcoin for more than one year showed a lesser interest in liquidating their investments versus those who held the digital asset for 3-6 months. Its dataset covered the period of Bitcoin's correction from circa $65,000 on April 14 to around $44,000 on Aug. 9.

*Bitcoin spent output age bands. Source: Glassnode*

On the other hand, all investor cohorts were instrumental in crashing the BTC price in 2018 from $19,891 to $3,128.

With a majority of "old coins" not deciding to secure their 275% year-over-year profits even after a 35% downside correction, Glassnode data hinted strong "hodling behavior" that might have Bitcoin escape a 2018-like mass capitulation event.

Glassnode noted:

"Despite a strong rally to $45k, the Bitcoin market still has not seen a significant increase in old coins (>1y) being spent. This is very different to the 2018 bear market where old hands took exit liquidity on most relief rallies."

Panic selling missing

Excessive valuations led by the initial coin offering (ICO) frenzy were the main cause behind the 2018 cryptocurrency market crash. Random startups raised billions of dollars to build blockchain platforms, but a majority of them turned out to be either vaporware or scams in the end.

When the bubble finally popped, the cryptocurrency market ended up crashing from $700 billion in January 2018 to $102bn in December 2018. As a result, Bitcoin—which was one of the currencies of choice during startup fundraisers—fell 85.27% from its then-record high of $19,891.

*Bitcoin performance during 2018 crypto bubble burst. Source: TradingView.com*

Nevertheless, 2021's Bitcoin price rally originated from solid macroeconomic grounds as investors hunted for safe havens against loose monetary policies implemented by central banks worldwide. As a result, central banks' efforts to guard economies against the financial aftermath of the coronavirus pandemic, pushed the global debt to over $281 trillion last year.

That was 355% of the global gross-to-domestic product (GDP). According to the Institute of International Finance, the borrowing expects to increase by another $10tn in 2021.

Global public debt rises to all-time high in 2020. Source: Institute of International Finance

"People have less wealth and more debt. The devaluation of fiat currencies has made everything more expensive around us," said Anthony Pompliano, partner at Pomp Investments, in a note to clients, adding:

"Bitcoin promises that we will usher in a new era of sound money. The currency is outside the system. No one controls it. People will once again be able to save their way to financial freedom. [Moreover], the money won’t lose value over time. [Instead], the purchasing power will increase."

Short-term investors returning?

Bitcoin's recent rebound from below $30,000 to over $45,000 also coincided with a modest spike in the percentage of investors that last bought the digital asset 3-6 months ago.

*Bitcoin unspent transaction output heat map. Source: Glassnode*

On July 19, when Bitcoin was wobbling near $30,000, the cryptocurrency's net unspent transaction output for 3M-6M investors was 12.84%. That surged to 13.44% on Aug. 9. Bitcoin was trading around $45,130 on the same day, showcasing that weak hands were turning strong.

Bitcoin hits $45K ahead of July inflation report, but one fractal hints at looming correction

August 8, 2021 Coin Telegraph

$Bitcoin hits K ahead of July inflation report, but one fractal hints at looming correction$

Bitcoin

The flagship cryptocurrency hits its highest level in more than two months as inflation is expected to rise by another 0.5% in July.

Bitcoin (BTC) reached its highest level in more than two months with just a few days remaining before the July inflation report.

The top cryptocurrency climbed 1.65% to $45,363 on Aug.8, continuing the upside momentum that has already seen it jumping 21.62% from its August 5 low of $37,300.

*BTC/USD daily chart. Source: TradingView.com*

Momentum was strong among the Bitcoin rivals as well. Ether (ETH), the second-largest crypto by market cap, increased 29.78% from its Aug. 3 low of $2,630, crossing over $3,100 on Sunday. Its gains came after Ethereum's London hard fork went live on Aug. 5, which should add deflationary pressure to the supply of ETH.

July inflation report, on-chain

On Wednesday, Aug.11, the United States Bureau of Labor Statistics will release July's inflation report, with markets forecasting a 0.5% spike. The projections appear after the consumer price index (CPI) jumped to 5.4% year-over-year in June to log its biggest increase in 13 years.

Bitcoin bulls have responded positively to the recent inflation reports. They effectively guarded the cryptocurrency against falling below $30,000 after the May 19 crash. Meanwhile, their recent efforts to push the prices above $40,000, eventually leading into a slow upside break above $45,000, indicates strong demand for Bitcoin, which appears to be breaking out of its summer slump.

Lex Moskovski, chief investment officer at Moskovski Capital, highlighted a Glassnode chart that showed dramatic spikes in entities entering the Bitcoin network, matching the growth with the rising BTC/USD rates.

*Bitcoin entities net growth chart. Source: Glassnode*

"Amount of new Bitcoin entities continues to hit all-time high," Moskovski tweeted.

Additionally, on-chain analyst Willy Woo said the ongoing Bitcoin momentum should push its prices above $50,000, citing supply-demand imbalance in the market. He said that all investor cohorts were buying Bitcoin, which led to supply shock.

Woo referred to a chart he posted on July 15 when Bitcoin market was correcting lower after peaking out sessional at $36,675. The graph, as shown below, highlighted events of Bitcoin liquidity shock across all the exchanges and their relation to the prices.

Woo explained:

"Fundamentals do not predict short-term price, but given enough time price discovery reverts to fundamentals. [The] exact value is $53.2k today, with a standard deviation band between $39.6k - $66.8k (68.5% confidence)."

Bearish fractal

However, the latest Bitcoin climb does carry risks of becoming a dead cat bounce based on previous top-to-bottom Fibonacci retracement fractals.

*Bitcoin Fib retracement from local tops to 200-week EMA. Source: TradingView.com*

After setting up record highs, Bitcoin tends to correct toward its 200-week exponential moving average (200-week EMA; the yellow wave), where it eventually bottoms out to pursue another bullish cycle.

In the past two events, the BTC/USD exchange rate posted fake recovery rallies after testing the 23.6 Fib line as support. Those upside moves failed short of turning into big bullish momentums after facing resistance at higher Fib levels.

For instance, in 2019, Bitcoin rebounded by more than 50% after bouncing off from its 23.6 Fib line near $7,357. But the cryptocurrency faced extreme selling pressure near its 61.8 Fib line of $10,613. Eventually, it resumed its downtrend and crashed to as low as $3,858 in March 2020.

If the fractal repeats, Bitcoin could face extreme resistance at 61.8 Fib level at $46,792 and correct lower to retest its 200-day EMA, which currently sits below $20,000.

Independent market commentator and trader Keith Wareing suggested that an imminent bullish crossover between Bitcoin's two weekly moving averages hints at the beginning of a multi-month bull run. Dubbed as MACD, the indicator was instrumental in predicting the 2020 bull run.

*Bitcoin prices and MACD crossovers in recent history. Source: TradingView.com*

"The weekly MACD is due to cross bullish on Bitcoin after tonight’s close," opined Wareing to his followers with the price of Bitcoin so far maintaining above $44,500 at the time of writing.

Bitcoin erases May crash losses as BTC price rebounds to $44K

August 7, 2021 Coin Telegraph

Bitcoin

Indicators suggest that Bitcoin is looking to repeat the October 2020-like rally that sent the prices from $10,000 to $65,000.

Bitcoin (BTC) price reacted as high as $44,600 on Aug. 7, the highest level since before the infamous May 19-crash. Meanwhile, there are increasing speculations that BTC could undergo a similar upside boom like the one that began in October 2020.

*Bitcoin reached $44,600 before correcting lower on profit-taking sentiment. Source: TradingView.com*

At least two indicators expected Bitcoin to pursue massive uptrends. The first one was Glassnode's Entry-Adjusted Net Unrealized Profit/Loss that assists investors in determining whether the Bitcoin network as a whole is currently in a state of profit or loss.

Understanding NUPL and its heat map

A NUPL reading above zero indicates that the network is in a state of net profit, while values below zero indicate a state of net loss. The further NUPL deviates from zero, the more it helps investors spot market tops and bottoms.

They spot the degree of deviations from zero via a heat map. For example, during an uptrend, red indicates "capitulation," orange means "hope," yellow shows "optimism," green hints "belief," and blue underscores "euphoria."

In October 2020, the Bitcoin NUPL moved upward of zero as its heat map changed colors from yellow to green after successfully bouncing off the red zone in March earlier that year.

Later, the prices moved from approximately $10,000 to around $65,000.

*Bitcoin entry-adjusted NUPL. Source: Glassnode*

Bitcoin dropped later to below $30,000, a period that saw its NUPL mood switching from greed to denial and later to anxiety. But a strong buying sentiment near the $30,000 level helped sustain Bitcoin's upside sentiment intact, offsetting anxiety with optimism.

But just as Bitcoin reclaimed $40,000 and exceeded its upside momentum, the sentiment switched back to belief for the first time since October 2020. Lex Moskovski, Chief Investment Officer at Moskovski Capital, also highlighted Bitcoin's upside prospects following the NUPL upgrade in a tweet, saying:

"We've entered the Belief phase."

Alternatively, the popular Fear and Greed Index also touched 69, a score that indicates a sentiment of Greed, which the market also hasn't seen since May.

*The fear and greed index has risen to “greed” as bitcoin hits $44,000. Source: Alternative*

The second indicator

On a similar note, market analyst Will Clemente also highlighted another indicator that promised to repeat October 2020's upside boom. The fractal concerned the dynamic between short and long-term Bitcoin holders.

Clemente noted that short-term holders sold off their Bitcoin holdings to long-term holders, insomuch that the former accumulated almost as much as the Bitcoin supply in August 2021 that they had back in October 2020.

"Long-term holders now have over 66% of supply, short-term is now down to nearly 20%," the analyst wrote. "Before the main bull run began in October, long-term holder supply reached just over 68%."

*Short-term holders have been doing most of the selling. Source: Glassnode*

That further indicated that the latest price appeared out of the demand from investors that had no intentions of selling Bitcoin immediately.

Bitcoin achieved an intraday high of $44,600 on Saturday before correcting lower due to profit-taking sentiment. BTC was changing hands for $43,500 at the time of writing.

Bitcoin could be on the verge of a big breakout at $42K, hodler activity suggests

August 6, 2021 Coin Telegraph

Bitcoin

$42,000 is becoming an increasingly important battleground for Bitcoin bulls and bears.

On-chain analyst Willy Woo asserted that Bitcoin (BTC) would break above the $42,000-resistance level in its coming attempts.

The researcher based his bullish analogy on the so-called Rick Astley indicator, a heat-map that tracks investors—the Rick Astleys of this world—that buy Bitcoin to hold the asset for longer timeframes.

The indicator earlier predicted Bitcoin price spikes based on investors' buying activity below certain technical resistance levels.

*Investors' buy-and-hold habits tracked using Bitcoin on-chain heat map. Source: Willy Woo*

However, Woo noted that the "strong-handed long term investors are absorbing" the Bitcoin supply below $42,000, which raises the cryptocurrency's prospects of closing above the level.

*90 day moving average of Bitcoin moving to Rick Astley about to cross bullish. Source: Willy Woo, Glassnode*

"Strong HODLers have been taking this opportunity to scoop large amounts of coinage while we're under the resistance ceiling," tweeted Woo.

The statements came a day after Bitcoin reclaimed its psychological resistance level of $40,000 as support.

BTC sustained above the price floor on Friday despite looming profit-taking sentiment. It established an intraday high of $41,191 before correcting lower to $40,360, as of 12:05 UTC.

Bitcoin's upside prospects looked limited due to its tendency to reject bullish breakout attempts above the $40,000-$42,000 area. In detail, the BTC/USD exchange rate has made at least ten attempts to close above the said range after May 19's notorious crypto crash,

*Bitcoin stuck below $42,000-resistance level. Source: TradingView.com*

But each time, strong selling pressure around the area prompts the BTC/USD rates lower towards the $30,000-$35,000 range.

Supply squeeze underway

Woo's upside predictions also carried the supply squeeze undertones—a situation wherein the number of available Bitcoin supply falls below its spot market demand, leading to higher bids.

Woo applied his own "Liquid Supply Shock" indicator to conclude that markets ran out of Bitcoin.

*Bitcoin supply shock with respect to its price. Source: Willy Woo*

In detail, Liquid Supply Shock is the ratio of coins that traders cannot buy versus the coins that they can buy. Woo calculates the supply shock by dividing the coins held by strong-handed investors with the coins held by speculative investors.

"Coins are rapidly disappearing from the available market as strong holders continue to lock them away for long-term investment," said Woo, adding that the supply squeeze could send Bitcoin to $55,000.

"I’ve not seen a supply shock opportunity like this since Q4 2020 when BTC was priced at $10k only to be repriced at $60k in the months thereafter. Our supply shock is still in play with higher prices expected."

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