Crypto Asset Manager Wisdomtree Reveals ‘Direct-to-Retail’ Digital Wallet

February 1, 2022 Bitcoin.com

US crypto executive order looms — 5 things to watch in Bitcoin this week

January 31, 2022 Coin Telegraph

Bitcoin

A lack of bullish momentum leaves Bitcoin wanting this week as macro clouds gather on the horizon.

Bitcoin (BTC) starts a new week with a bang — but not in the right direction for bulls.

A promising weekend nonetheless saw BTC/USD attract warnings over spurious "out of hours" price moves, and these ultimately proved timely as the weekly close sent the pair down over $1,000.

At $37,900, even that close was not enough to satisfy analysts' demands, and the all-too-familiar rangebound behavior Bitcoin has exhibited throughout January thus continues.

The question for many, then, is what will change the status quo.

Amid a lack of any genuine spot market recovery despite solid on-chain data, it may be an external trigger that ends up responsible for a shake-up. The United States' executive order on cryptocurrency regulation is due at some point in February, for example, while exact timing is unknown.

The Federal Reserve is a further area of interest for analysts, as any cues on inflation, interest rate hikes or asset purchase tapering could significantly impact traditional markets, to which Bitcoin and altcoins remain closely correlated.

With frustrating times characterizing the first month of 2022, Cointelegraph takes a look at the state of the market this week.

We've identified five things worth considering when working out Bitcoin's next moves.

Bears "hammer" down on BTC weekly close

Even the meagre gains into the weekly close were a short-lived reason to celebrate for Bitcoin bulls this Sunday.

Midnight UTC saw an immediate rejection candle sweep in, with BTC/USD diving to $36,650 on Bitstamp.

As noted by trader, analyst and podcast host Scott Melker, strong volume accompanied the move, underscoring the unreliable nature of weekend price action when it comes to building a position.

As several other sources said last week, Melker reiterated that $39,600 needs to be reclaimed for a more bullish outlook to prevail.

$BTC Weekly

Pretty hammer candle (or high wave spinning top, choose).

Strong volume, long wick into demand.

Not really bullish until >$39,600.

Have not had consecutive green wks in months, need confirmation. 2 weeks ago was a "bullish candle" as well, didn't work out. pic.twitter.com/HlI8XI6RO2
— The Wolf Of All Streets (@scottmelker) January 31, 2022

Just as uninspired by the weekly candle was fellow trader and analyst Rekt Capital, who in a fresh Twitter update said that BTC "continues to struggle with $38,500 resistance."

"This is the area BTC needs to Weekly candle Close above to ensure upside beyond ~$39,000," he added.

With a disappointing performance behind it, Bitcoin is thus back in the same old range — one which some warn could yet result in a retest of lower levels.

"Personally looking forward to any opps to compound if we trade this 29-40k range for long," popular trader Pentoshi confirmed.

The trip to highs around $38,600 meanwhile succeeded in raising previously negative funding rates on derivatives as sentiment swiftly changed from expecting further downside to expecting a bullish continuation.

The reversal, however, sent funding rates broadly back into negative territory, with most hovering just under neutral at the time of writing.

*BTC funding rates chart. Source: Coinglass*

Can S&P 500 upend worst month since March 2020?

While Bitcoin's monthly close is not yet slated to bring any surprises, stock markets may nonetheless provide some last-minute relief.

With futures up pre-session Monday, the S&P 500, with which Bitcoin has displayed growing positive correlation in recent months, is heading for its worst monthly performance since March 2020.

The S&P is down 7% this month, echoing the jittery start to the year for Bitcoin, as Fed policy begins to bite enthusiasm which accompanied unprecedented liquidity provision at the start of the Coronavirus pandemic.

*S&P 500 1-hour candle chart. Source: TradingView*

While the Fed is now tight-lipped over the timetable for rate hikes which should follow the turning-off of the "easy money" spigot, closer to home, another problem for Bitcoiners is on the horizon.

The Biden administration's upcoming executive order on crypto, ostensibly moved forward to February, could put the cat among the pigeons once again in terms of already battered sentiment.

The specter of the Infrastructure Bill remains for many a market participant, and further disadvantageous treatment of the crypto phenomenon would be seriously unwelcome from a country now hosting the lion's share of the Bitcoin mining hash rate.

According to a report from Bloomberg last week, the order should focus on the "risks and opportunities" crypto affords.

The plans have already seen "multiple meetings" with officials, with the aim seemingly to unify government regulatory approaches to the crypto sphere.

Old hands age well

Behind the scenes, the more comforting trend of seasoned Bitcoin hodlers clinging to their assets continues to play out.

Data from on-chain analytics firm Glassnode this week confirms that the number of coins that last moved between five and seven years ago has reached an all-time high.

That cohort of coins now totals 716,727 BTC.

*Bitcoin supply last active five to seven years ago vs BTC/USD chart. Source: Glassnode/ Twitter*

At the same time, January in fact saw an overall decrease in Bitcoin exchange reserves despite price losses. As per Glassnode data, major exchanges are down around $243 million this week alone.

Previously, Cointelegraph reported on the ongoing depletion of exchanges' BTC holdings.

Separate figures from CryptoQuant, which track 21 major trading platforms, further confirm that balances are at their lowest since 2018.

*Bitcoin exchange balance vs. BTC/USD chart. Source: CryptoQuant*

GBTC dives to record 30% discount

Things aren’t going so well for the Grayscale Bitcoin Trust (GBTC).

Despite data showing the reemergence of institutional interest in Bitcoin in January, demand for the industry’s flagship BTC investment product continues to wane.

According to data from on-chain analytics firm Coinglass, last week saw GBTC trade at its biggest ever discount relative to the Bitcoin spot price.

*GBTC premium, holdings, marker price chart. Source: Coinglass*

This discount to net asset value (NAV) — the fund’s BTC holdings — used to be a premium investors paid for exposure, but now, the tables have long turned.

On Jan. 22, new entrants were technically able to buy GBTC shares at nearly 30% below the spot price on the day.

As Cointelegraph reported, GBTC has faced a rapidly changing environment in recent months, thanks to a combination of price action and the launch of exchange-traded funds (ETFs). GBTC itself is due to become a spot-based ETF — but only with U.S. regulatory approval.

Precising the situation, on-chain analyst Jan Wuestenfeld said that in spite of the discount, GBTC did not necessarily represent a way for institutional investors to profit from “easy money” in the long term.

“Yes, if you believe it will be converted into a spot ETF at some point, but there are also the fees to consider and also that you don't really hold the keys,” he said as part of a Twitter debate at the weekend.

Not so fearful after all?

Trustworthy or not, something is happening to Bitcoin on-chain sentiment this week.

After spending almost all of January in the depths of “extreme fear,” accompanied by a revisit of rare lows seen only a handful of times, the Crypto Fear & Greed Index is finally looking up.

On Sunday, the Index exited the “extreme fear” zone — a reading between 0 and 25 — for the first time since Jan. 3.

Fear & Greed uses a basket of factors to determine overall market sentiment, and its range highs and lows have accurately depicted extremes in price.

That a more positive mood may finally be entering is a welcome signal for analysts, but as ever, all depends on whether such a recovery is sustainable and remains uninterrupted by external surprises.

The party proved to be fleeting, as the weekly close hammer candle sent readings back into "extreme fear."

Nonetheless, with brief trip to 29 — “fear” — the Index thus avoided the dubious honor of spending the longest-ever amount of time in the “extreme fear” zone since it was created in 2018.

*Crypto Fear & Greed Index. Source: Alternative.me*

The fickle nature of sentiment overall, meanwhile, was not lost on veteran trader Peter Brandt, who at the weekend poked fun at how perspectives have changed since the price correction began.

I find it fascinating that many (not all) on social media who wore laser eyes in Mar/Apr and predicted a rocket shot for $BTC in Nov now are predicting that the $30k level will be violated

When bulls wear laser eyes -- time to SELL
When bulls become bears -- time to BUY???? pic.twitter.com/ytchaFLDfN
— Peter Brandt (@PeterLBrandt) January 30, 2022

With the all-time highs in November as a focal point, Brandt described the latter half of 2021 as the "Laser Greed Era."

Terra (LUNA) at risk of 50% drop if bearish head and shoulders pattern plays out

January 28, 2022 Coin Telegraph

Bitcoin

LUNA price is at risk of further downside, but analysts point to a possible rebound as the altcoin tests a reliable, multi-month moving average as support.

Terra (LUNA) may fall to nearly $25 per token in the coming weeks as a head-and-shoulders (H&S) setup develops, indicating a 50% price drop, according to technical analysis shared by CRYPTOPIKK.

H&S patterns appear when the price forms three peaks in a row, with the middle peak (called the "head") higher than the other two (left and right shoulders). All three peaks come to a top at a common price floor called the "neckline."

Traders typically look to open a short position when the price breaks below the H&S neckline. However, some employ a "two-day" rule where they wait for the second breakout confirmation when the price retests the neckline from the downside as resistance, before entering a short position.

Meanwhile, the ideal short target for traders comes out to be at length equal to the maximum distance between the head and the neckline. In LUNA's case, the price has now been heading toward the same H&S short target, currently near $25, as shown in the chart below.

*LUNA/USD daily price chart. Source: TradingView*

Meanwhile, the volume recorded during the H&S breakout appears consistent, underscoring that the ongoing downtrend has enough bearish sentiment. This further raises risks of further declines in the Terra market.

LUNA's daily momentum indicators, primarily relative strength index (RSI) and money flow index (MFI), have both entered their respective oversold regions, which some might consider to be a buy signal. CRYPTOPIKK recognized that they could prompt the LUNA price to rebound but said "the trend still seems [to be] heading down."

Where's the bottom?

The bearish outlook appears as the LUNA trades under the pressure of strong macroeconomic catalysts, mainly the U.S. Federal Reserve's decision to unwind its $120 billion a month asset purchasing program entirely by March, followed by the first interest rate hike from its current near-zero levels.

Tightening monetary policies had started hurting assets that had been bullish when these policies were loose. That includes some sections of the U.S. stock market and Bitcoin (BTC). So, LUNA seems to have been tailing Bitcoin's losses against the ongoing market uncertainty, especially as it sits atop a year-over-year profit of 3,200% versus BTC's 11.50% gains.

*LUNA/USD weekly price chart. Source: TradingView*

In its short history as a financial asset, LUNA's downtrends have typically come to exhaustion as it tests its 50-week simple moving average (50-week SMA; the blue wave in the chart below) as support. That price floor was near $30 at the press time.

Meanwhile, on the daily timeframe chart, LUNA has been testing its 200-day exponential moving average (200-day EMA) for a potential rebound. Should it happen, LUNA's next upside target appears to be near $75, as shown in the chart above.

Conversely, a decisive move below the 200-day EMA wave may trigger the H&S setup toward $25.

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.

Precious Metals, Cryptocurrencies, Stock Markets Falter Following Powell’s Rate Hike Statements

January 27, 2022 Bitcoin.com

House members call for an end to lawmakers trading stocks — is crypto next?

January 24, 2022 Coin Telegraph

Coin Telegraph

"This would end the potential corruption of lawmakers pursuing policy outcomes that benefit their portfolios,” said 27 members of the U.S. House of Representatives in a letter calling for a ban on stock trading.

Congresspeople currently HODLing or actively trading in crypto may have to stop doing so while in office if recent pushes to ban lawmakers from investing in stocks gain enough support.

In a Monday letter addressed to Speaker Nancy Pelosi and Minority Leader Kevin McCarthy, 27 members of the U.S. House of Representatives called for action “to prohibit members of Congress from owning or trading stocks.” Among the bipartisan group of lawmakers who signed onto the letter was Illinois congressperson Bill Foster, who is also a member of the Congressional Blockchain Caucus. In addition, the letter seems to have support from politicians diametrically opposed on major issues like Progressive Democrat Rashida Tlaib and Republican Matt Gaetz, who is reportedly under investigation by the Justice Department for allegedly violating sex trafficking laws and obstruction of justice.

Members of Congress are currently allowed to buy, sell and trade stocks and other investments while in office, but are also bound to disclose such moves by the Stop Trading on Congressional Knowledge Act, or STOCK Act, passed in 2012. This piece of legislation requires lawmakers to report any purchase, sale or exchange over $1,000 within 30 to 45 days but provides minimal financial and legal consequences for not filing in time. The Monday letter noted that the STOCK Act “had been violated hundreds of times just since 2020.”

“It’s clear the current rules are not working,” said the letter to Pelosi and McCarthy. “Congress should close these loopholes by simply banning members from owning or trading individual stocks while in office. In addition to ensuring that members’ access to information doesn’t advantage them over the public when trading stocks, as the STOCK Act sought, this would end the potential corruption of lawmakers pursuing policy outcomes that benefit their portfolios.”

The House members added:

“There is no reason that members of Congress need to be allowed to trade stocks when we should be focused on doing our jobs and serving our constituents. Perhaps this means some of our colleagues will miss out on lucrative investment opportunities. We don’t care. We came to Congress to serve our country, not turn a quick buck.”

Senators Jon Ossoff and Mark Kelly proposed a similar piece of legislation for the U.S. Senate on Jan. 12. Ossoff referenced a survey from the advocacy group Convention of States Action, which found that roughly 76% of voters said that lawmakers and their spouses had an “unfair advantage and should not be allowed to trade stocks while serving in Congress.”

Speaker Pelosi does not seem to have responded to the letter from House members. However, when questioned about a possible ban on lawmakers being allowed to trade stocks in December, she said “we’re a free-market economy — they should be able to participate in that.”

Democratic lawmaker Alexandria Ocasio-Cortez — whose name did not appear on the letter to Speaker Pelosi and Minority Leader Kevin McCarthy — said in December she believed members should neither hold nor trade individual stocks, hinting that to do so would allow them to “remain impartial about policy making.” She added that she extended this belief to holding digital assets and cryptocurrencies like Bitcoin (BTC).

Cointelegraph reported last Tuesday that seven members of Congress from both the Senate and House had declared investments in crypto during their time in office. Among lawmakers with the highest reported exposure were New Jersey Representative Jefferson Van Drew and Wyoming Senator Cynthia Lummis, who disclosed a 2020 investment of $250,000 in a trust operated by Grayscale, and a 2021 BTC purchase of up to $100,000, respectively.

Cointelegraph reached out to Representative Bill Foster for comment, but did not receive a response at the time of publication.

Coinbase, MicroStrategy Stocks Tank Alongside Crypto Market

January 24, 2022 The Crypto Briefing

Bitcoin shoots to $44,000 as US inflation hits 7% in December

January 12, 2022 Coin Telegraph

Bitcoin shoots to ,000 as US inflation hits 7% in December

Bitcoin Price

United States Consumer Price Index data shows that inflation hit 7% in December 2021, climbing 0.5% month over month. Bitcoin almost reached $44,000 upon the news.

The latest figures from the United States Bureau of labor statistics show that the (Consumer Price Index) CPI hit 7% in December.

Bitcoin (BTC) was volatile prior to the announcement, fluctuating over $2,000 from lows of $41,000 to $43,000 on Wednesday morning. Upon release of the figures, the price continued its upward climb, touching $44,000.

Prior to the announcement, Twitter was rife with speculation. According to a poll by @coinbureau, 53% of his 580,000 followers expected CPI to overshoot the consensus estimation of 7% inflation.

Macroeconomic specialist and cryptocurrency soothsayer Lyn Alden was on the money.

December CPI comes out tomorrow and has a decent shot at reaching 7%+ year-over-year.

But then unless monthly inflation accelerates from here, the year-over-year figure will likely peak within Q1 2022. pic.twitter.com/7hjA3ehAXI
— Lyn Alden (@LynAldenContact) January 11, 2022

The graph for inflation from the FED over the past 10 years is eye-opening. Since the pandemic, marked in grey, the inflation level plummeted before beginning a dizzying climb to 7%.

Castle Island Ventures' Nic Carter was more tongue-in-cheek prior to the data update. In anticipation of more inflation rises, he joked that he was “looking forward to the inflationista cope if CPI prints double digits”.

Inflation rates have become of paramount concern to developed countries around the world, but particularly for the United States. 7% is the highest inflation rate since the 1980s.

Traditional markets including the S&P kicked off in the green, up 0.36%, while BTC was up 2.8% during the morning’s action.

IMF: Bitcoin matured to ‘an integral part of digital asset revolution’

January 12, 2022 Coin Telegraph

Bitcoin

Crypto assets are no longer on the fringe of the financial system, which raises financial stability concerns, a new IMF research argues.

Crypto is no longer an obscure asset class within the financial ecosystem, but a growing correlation with the stock market undercuts the “investment hedge” role of Bitcoin (BTC) and other cryptocurrencies, according to new International Money Fund (IMF) research.

A blog post accompanying the survey highlights new risks associated with the growing interconnectedness between virtual assets and financial markets. Penned by IMF Monetary and Capital Markets Department director Tobias Adrian as well as economist Tara Iyer and Research deputy division chief Mahvash S. Qureshi, the article claims that the increasing correlation between crypto assets and stocks “limits their perceived risk diversification benefits and raises the risk of contagion across financial markets.”

“Crypto assets such as Bitcoin have matured from an obscure asset class with few users to an integral part of the digital asset revolution,” the article read, adding that this transition comes along with financial stability concerns.

Nothing that BTC and Ether (ETH) rarely correlated with major stock indexes before the pandemic, the authors agreed that crypto assets helped diversify risk for investors by acting as a hedge against swings in other asset classes. “But this changed after the extraordinary central bank crisis responses of early 2020,” the article reads, adding that crypto and stocks surged hand in hand as investors’ risk appetite grew.

*60-day correlation coefficient between Bitcoin and S&P 500 index. Source: IMF*

The correlation coefficient between BTC and the S&P 500 index has jumped 3,600%, going from 0.01 to 0.36 after April 2020. This means that the two asset classes have been more closely rising and falling together since the coronavirus pandemic.

With stronger correlation comes greater risks for Bitcoin, according to IMF experts. The growing interconnectedness between crypto and equity markets would permit the transmission of shocks that can destabilize financial markets. Noting that crypto assets are no longer on the fringe of the financial system, the authors summarized:

“Given their relatively high volatility and valuations, their increased co-movement could soon pose risks to financial stability especially in countries with widespread crypto adoption.”

The experts further called for a coordinated global regulatory framework “to guide national regulation and supervision and mitigate the financial stability risks stemming from the crypto ecosystem.”

Last month, IMF chief economist Gita Gopinath made a similar call for a global policy regarding crypto. She argued that if countries were to ban crypto then they would not have any control over offshore exchanges that are not subject to their country's regulations.

‘Most bullish macro backdrop in 75 years’ — 5 things to watch in Bitcoin this week

January 10, 2022 Coin Telegraph

Bitcoin

Can 2022 still turn out to be a bull year? Not many believe so, but short-term volatility should pass nonetheless, analysts say this week.

Bitcoin (BTC) starts a new week in a strange place — one which is eerily similar to where it was this time last year.

After what various sources have described as an entire twelve months of “consolidation,” BTC/USD is around $42,000 — almost exactly where it was in week two of January 2021.

The ups and downs in between have been significant, but essentially, Bitcoin remains in the midst of a now familiar range.

The outlook varies depending on the perspective — some believe that new all-time highs are more than possible this year, while others are calling for many more consolidatory months.

With crypto sentiment at some of its lowest levels in history, Cointelegraph takes a look at what could change the status quo on shorter timeframes in the coming days.

Will $40,700 hold?

Bitcoin saw a trying weekend as the latest in a series of abrupt downward moves saw $40,000 support inch closer.

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD hitting $40,700 on major exchanges before bouncing, a correction which has since held.

Ironically, it was that very level which was in focus on the same day in 2021, that nonetheless coming during what turned out to be the more vertical phase of Bitcoin’s recent bull run.

Last September also returned the focus to $40,700, which acted as a turning point after several weeks of correction and ultimately saw BTC/USD climb to $69,000 all-time highs.

Now, however, the chances of a breakdown to the $30,000 zone are unreservedly higher among analysts.

“Weekly Close is just around the corner,” Rekt Capital summarized alongside a chart with target levels.

“Theoretically, there is a chance that $BTC could perform a Weekly Close above ~$43200 (black) to enjoy a green week next week. Weekly Close under ~$43200 however & BTC could revisit the red area below.”

*BTC/USD annotated candle chart. Source: Rekt Capital/ Twitter*

Bitcoin ultimately closed at $42,000, since hovering at around that level in what could turn out to be some temporary relief for bulls.

“I think market puts in a lower high,” fellow trader and analyst Pentoshi forecast, adding that he believes $40,700 will ultimately fall.

An increasingly alluring target, meanwhile, lies at last summer’s $30,000 floor.

Consensus forms over dire outlook for cash

The macro picture this week is particularly complicated for risk asset fans, with Bitcoin and altcoins no exception.

What the future holds, however, varies considerably from one pundit to another.

The United States Federal Reserve is broadly seen to start raising interest rates in the coming months, this making investors de-risk and causing a headache for crypto bulls. “Easy money,” which began flowing in March 2020, will now be much harder to come by.

The bearish viewpoint was summarized neatly by ex-BitMEX CEO, Arthur Hayes, in his latest blog post last week.

“Let’s forget what non-crypto investors believe; my read on the sentiment of crypto investors is that they naively believe network and user growth fundamentals of the entire complex will allow crypto assets to continue their upward trajectory unabated,” he wrote.

“To me, this presents the setup for a severe washout, as the pernicious effects of rising interest rates on future cash flows will likely prompt speculators and investors at the margin to dump or severely reduce their crypto holdings.”

This week sees the U.S. consumer price index (CPI) data for December released, numbers which will likely feed into the story of surprise inflation gains.

Hayes is far from alone in worrying over what the Fed may bring to crypto this year, with Pentoshi among others likewise calling a temporary end to the bull run.

“And the final question is, can crypto ignore the Fed if it decides to go all out wielding a deflationary machete? I doubt it,” analyst Alex Krueger concluded in a series of tweets on the issue this weekend.

“‘Don't fight the Fed’ applies both ways, up and down. If the Fed is *too hawkish* then Houston, we have a problem.”

There were some optimists left in the room. Dan Tapiero, Founder and CEO of 10T Holdings, told followers to “ignore” the recent rout and focus on an unchanged long-term investment opportunity.

“Most bullish macro backdrop in 75 years,” he said.

“Booming economy supported by massive negative real rates. Fed will never equalize rates with inflation. Stay long stocks and Bitcoin and ETH. Hodl through short term volatility. Real Dollar cash savings will continue to lose value.”

Here's a look at the Effective Fed Funds Rate and Inflation Rates when the Unemployment Rate was at 3.9%, as it is today.

Find the outlier... pic.twitter.com/zU1zRj1uXC
— Charlie Bilello (@charliebilello) January 7, 2022

Tapiero highlighted data compiled by Charlie Bilello, founder and CEO of Compound Capital Advisors.

RSI hits two-year lows

Amid the gloom, not everything is pointing to a protracted bearish phase for Bitcoin specifically.

As Cointelegraph has been reporting, on-chain indicators are calling for upside in droves — and historical context serves to support those demands.

This week, it’s Bitcoin’s relative strength index (RSI) which continues to headline, reaching its lowest levels in two years.

#Bitcoin RSI has been this low just 2 other times in the last 2 years. Looks like a bottom is near and bounce due. Let's see pic.twitter.com/qhQ1pD8yEl
— Bitcoin Archive (@BTC_Archive) January 9, 2022

RSI is a key metric used to determine whether an asset is “overbought” or “oversold” at a given price point.

Plumbing the depths at $42,000 suggests that such a level really is considered too extreme by the market, and a rebound should occur to balance it.

By contrast, last January, RSI was sky high and conversely well within “overbought” territory, while BTC/USD traded at the same price.

“The Bitcoin RSI is on the lowest point in 2 years on the daily. March 2020 & May 2021 were the last ones. And people flip bearish here / want to short,” a hopeful Cointelegraph contributor Michaël van de Poppe commented.

*BTC/USD 1-day candle chart (Bitstamp) with RSI. Source: TradingView*

Cointelegraph noted similarly bullish hints on the monthly RSI chart last week.

Hash rate recoups Kazakhstan losses

Another blip from last week already “curing itself” comes from the realm of Bitcoin fundamentals.

After hitting new all-time highs throughout recent weeks, Bitcoin’s network hash rate took a hit when turbulence in Kazakhstan comprised internet availability.

Kazakhstan, home to around 18% of hash rate, has since stabilized, allowing the hash rate to mostly return to prior levels of 192 exahashes per second (EH/s).

At one point down to 171 EH/s, responses to what may have reminded some of last May’s China mining ban appear to have lifted hash rate and preserved record-breaking miner participation.

Bitcoin’s network difficulty, despite the upheaval, still managed to put in a modest increase this weekend and is currently on track to do so again at its next automated readjustment in just under two weeks.

*Live Bitcoin hash rate chart screenshot. Source: MiningPoolStats*

“Going up forever,” on-chain analyst Dylan LeClair commented about the classic mantra, “price follows hash rate.”

For context, China’s mining rout caused hash rate to decline by 50%. It took around six months to recoup the losses.

“What if…?”

Someone who has long been saying that it’s high time for a Bitcoin trend reversal is quant analyst PlanB, creator of the stock-to-flow-based BTC price models.

Currently weathering a test of his creations — and the accompanying storm of social media criticism — PlanB nonetheless remains more optimistic than most when it comes to mid to long-term price action.

“I know some people have lost faith in this bitcoin bull market,” he acknowledged this weekend.

“However we are only halfway into the cycle (2020-2024). And although BTC experiences some turbulence at $1T, the yellow gold cluster at S2F60/$10T (small black dots are 2009-2021 gold data) is still the target IMO.”

*Stock-to-flow cross-asset (S2FX) chart. Source: PlanB/ Twitter*

He was referring to the stock-to-flow value for Bitcoin, gold and other assets as part of his stock-to-flow cross-asset (S2FX) model, which calls for an average BTC/USD price of $288,000 during the current halving cycle.

Closer to home, however, a more simplified comparison between Bitcoin this cycle and its two previous ones saw a feasible trajectory beginning with a U-turn now.

What if ... pic.twitter.com/te36HkFAbQ
— PlanB (@100trillionUSD) January 9, 2022

A separate model, the floor model, which demanded $135,000 per bitcoin by the end of December, has now been discarded after failing to hit its target for the first time ever in November.

New year, same ‘extreme fear’ — 5 things to watch in Bitcoin this week

January 3, 2022 Coin Telegraph

Bitcoin

Could Bitcoin be any less interesting for the average hodler? The remarkable split between BTC price action and network fundamentals continues into 2022.

Bitcoin (BTC) begins its first full week of 2022 in familiar territory below $50,000.

After ending December at $47,200 — far below the majority of bullish expectations — the largest cryptocurrency has a lot to live up to as signs of a halving cycle peak remain nowhere to be found.

With Wall Street set to return after stocks conversely ended the year on a high, inflation rampant and interest rate hikes looming, 2022 could soon turn out to be an interesting market environment, analysts say.

So far, however, all is calm — BTC/USD has produced no major surprises for weeks on end.

Cointelegraph takes a look at what could change — or continue — the status quo in the coming days.

Stocks could see 6 months of "up only"

Look no further than the S&P 500 for an example of the state of play when it comes to U.S. equities.

The index achieved no fewer than 70 all-time highs in 2021, rounding out the year with a flourish, even as risk assets looked far less appetising.

Bitcoin was among them, trailing below the $50,000 mark with the only noticeable events coming in the form of peaks and troughs around thin holiday liquidity.

With that said, central bank policy is widely tipped to provide a potential cat among the pigeons in the coming months. The Federal Reserve has signaled two interest rate hikes this year, and the market’s ability to absorb them is seen as a key test for asset performance.

For the first chunk of the year, however, it may well be a continuation of the latest flavor of “business as usual” — stocks adding to all-time highs.

“History suggests the beginning of rate rise regimes actually result in stock market strength for 6 months,” Charles Edwards, founder of asset manager Capriole, noted in a series of tweets this week.

“10 of the 13 regimes (77%) since the 1950s had positive stock market returns over the first six months, averaging +5.1%. We are approaching the start of a new regime now.”

Edwards said that while such circumstances are generally “good” for Bitcoin, upheaval further down the line would likely mean that stocks take a beating in the long term thanks to the rate hikes.

“Without significantly higher economic growth (yet to be seen), it is unlikely any rate rise programs by the Fed will have a long runway,” he continued.

“Bitcoin will be volatile in this period, both an effect of stock market volatility, but also from sharp Fed course corrections.”

Inflation will be on the radar again next week, with Jan. 12 scheduled for the latest U.S. consumer price index (CPI) data for December.

*U.S. inflation chart. Source: Tradingeconomics.com*

$40,000 stays support floor

Bitcoin spot price action has provided precious little by way of interesting cues lately, staying in a well-defined range.

A tussle between bulls and bears has in fact been somewhat underwhelming in nature beyond rhetoric found on social media — volumes are thin, interest from retail low, and large players continue to maintain sell levels nearby.

Two levels I find important for #Bitcoin.

▫️ $48,000, the one we're currently rejecting on.
▫️ $49,400, the one that caused the latest correction and should flip for a bullish test of potentially mid $55k. pic.twitter.com/zISQu2IcDV
— Michaël van de Poppe (@CryptoMichNL) January 2, 2022

Responding to levels to watch from Cointelegraph contributor Micha¹el van de Poppe Sunday, popular trader and analyst TechDev agreed that $48,000 represents “a little brick wall.”

To the downside, Van de Poppe said that he was eyeing the area between $40,000 and $42,000, with action above that corresponding to “accumulation.”

Bitcoin, however, has a habit of upending even the strongest trend at the least expected moment.

For fellow trader Pentoshi, there is little cause for celebration at levels much below $60,000, these last appearing over a month ago.

“I will long logical areas in a downtrend. I will be macro bearish until 58-60k reclaim. And bullish at local areas,” he summarized about his position over the weekend.

Pentoshi and others urged a pivot to Ether (ETH) on the basis of altcoin strength, thus providing a convenient way to “de-risk” with Bitcoin underperforming.

That strength is captured in Bitcoin’s market cap dominance, which has now slipped under 40% for the first time since May, data from TradingView shows.

*Bitcoin dominance 1-week candle chart. Source: TradingView*

On-chain metrics predict "sustainable price trend"

For those looking for a silver lining to the uninspiring price action, on-chain metrics provide no shortage of relief.

The further away the market gets from last month’s snap correction, the more enticing Bitcoin looks as an investment punt based on historical trends.

In its latest newsletter issued Dec. 31, Capriole director Ryan McCoy highlighted the shifting tide in investor selling habits as aligning with the latter stages of previous corrections.

Of particular interest is Short Term Holder spent profit output ratio (SOPR) from on-chain analytics firm Glassnode, which shows the extent of gains or losses from recently-spent coins — specifically those which last moved in the past 155 days.

Currently with a median score below 1, SOPR shows that coins spent at a loss are declining in numbers — a potential form of seller exhaustion.

“Typically, when this metric starts to bottom and then rise, a more sustainable price trend has begun,” McCoy explained.

“The 30-day median is still below 1 (implying that the average price of the coins moved is lower than the price they were purchased at), but signs of life like this after a substantial corrective event suggest we are likely in the latter stages of the current correction.”

*Bitcoin short-term holder SOPR (30-day moving average) chart. Source: Capriole*

Cointelegraph has reported extensively on hodlers’ habits when it comes to BTC, and long-term investors remain steadfast in their conviction not to sell.

“Despite the -38% drop since November, Long-Term Holders continue to diamond hand Bitcoin,” McCoy summarized.

“The last time Bitcoin was at $47K, long-term holdings were 10% lower. To date there has been insignificant distribution despite the volatility. That’s bullish.”

Fundamentals have (almost) never been better

Continuing the positivity, network fundamentals underscore the strong belief of another cohort of essential Bitcoin market participants.

Miners, despite seeing all-time highs of $69,000, are accumulating, not selling, their coins.

At the same time, the network hash rate is at all-time highs of its own, these last seen in March and April before the upheaval of the Chinese ban sparked months of migration.

Should the old adage of “price follows hash rate” remain true, miners’ faith in long-term profitability of Bitcoin provides a key indicator of where the market is going.

“Metrics like this are effectively old-guard fundamental outlook material and are largely overlooked by newer and sexier methods of explaining price dynamics, supply and demand, but cannot be ignored for their ability to explain institutional and infrastructural support for securing the protocol that at this point effectively underpins the entirety of the crypto economy,” Capriole added.

*Bitcoin hashrate chart. Source: MiningPoolStats*

Hash rate is currently over 190 exahashes per second (EH/s), according to estimates from MiningPoolStats.

Later this week, meanwhile, Bitcoin network difficulty is set to increase by around 2.4%.

*Bitcoin difficulty chart. Source: Blockchain*

This reflects the competitiveness of the current mining landscape, and difficulty should shortly tackle 25 trillion again for the first time since the pre-China peak, data from Blockchain shows.

With every increase, difficulty reinforces network security, creating an even more robust ecosystem.

How sustainable is "extreme fear" this time?

Bitcoin sentiment began 2022 with serious cold feet, the Crypto Fear & Greed Index measuring “extreme fear.”

As Cointelegraph reported, investor emotions have become highly sensitive to even smaller price movements within the current range.

Fear & Greed reflects this, moving up 8 points since the weekend despite price action offering little change.

At the time of writing, the Index measured 29/100, nevertheless in the “fear” zone.

As noted by on-chain analytics resource Ecoinometrics, meanwhile, such sentiment has historically failed to play out for long.

“Bitcoin is back in extreme fear. Historically that means there is limited downside at 30 days,” it tweeted alongside a chart compiling the index and BTC/USD.

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