Bitcoin traders set $50K price target after BTC falls below key support level

May 1, 2024 Coin Telegraph

Bitcoin price falls to $29.5K, but on-chain data reflects investors’ growing interest

July 18, 2023 Coin Telegraph

<div>Bitcoin price falls to .5K, but on-chain data reflects investors' growing interest</div>

BTC price dropped below $30,000 again today, but the recent crab market price action is also backed by compelling investor activity on-chain.

Bitcoin (BTC) price dropped below the $30,000 level on July 18, which given the developments of the last month, retail investors may not have expected, but does today’s downside move represent an upcoming shift in the trend?

Data suggests that over the longer-term it does not.

To get to the positives first, Bitcoin price is still attempting to flip the $30,000 level to support after about 10 attempts since April of this year, but price is continuously finding buyers in the $28,000 to $25,000 range which buyers seem to be viewing as an accumulation zone.

On-chain data from Glassnode’s Bitcoin Accumulation Trend Score supports this sentiment and could be a positive, depending on how investors’ look at things given that the behavior of investors at $30,000 BTC price mirrors the same accumulation behavior seen in the $28,000 to $24,000 zone and the near the supposed $16,800 bottom.

*Bitcoin Accumulation Trend Score. Source: glassnode*

According to glassnode, “an Accumulation Trend Score of closer to 1 indicates that on aggregate, larger entities (or a big part of the network) are accumulating, and a value closer to 0 indicates they are distributing or not accumulating.”

Basically, buyers strongly accumulated from Nov. 2022 to Dec. 2022 and they were heavy accumulators from March to April 2023 when BTC recaptured $30,000 and the metric suggests they are doing the same in July as BTC attempts to either conquer the $30,000 resistance or received a boost from all the ETF and XRP SEC news.

Bitcoin is in a crab market

The current price action and derivatives market data suggest that Bitcoin is in a crab market, where price remains range bound and consolidates for a prolonged period of time. As JLabs analyst JJ the Janitor pointed out last week, a strong push through the $32,000 level would catalyze a CME gap fill from the Luna Terra-crash era.

*Bitcoin CME Futures showcasing Luna crash CME Gap. Source: JJ The Janitor*

From the perspective of Bitcoin’s weekly market structure, the $30,000 level is an important pivot point that has functioned as support in the previous bull market cycle (and now as resistance) but a grab above that level would essentially set a higher high on the longer time frame and be confirmation of a trend reversal where the next point of resistance is around the $37,000 level.

*BTC/USDT 1-week chart. Source: TradingView*

Traders’ activity in the derivatives market is another factor contributing to the current crab market. Funding is down, open interest is relatively muted and besides retail plebs who are attempting to long breakouts and long lower support retests, or short breakouts and getting liquidated in both instances, a meaningful surge in these metrics that would inspire confidence that price is on the verge of some massive breakout has yet to emerge.

*BTC/USDT derivatives data, daily chart. Source: JJ The Janitor*

Sure, DXY took a dip below 100 last week but it's possibly more connected to investors reacting to the Fed’s positive steps on inflation and too tight of a timeframe to expect some massive reaction from BTC immediately.

The price action in crypto exchange futures highlights degen longs and shorts trying to get ahead of price breakouts and that they are not having much success in the short term.

JJ the Janitor suggests that a metric to watch is aggregate open interest, if that breaks down sharply from the current range then some true buy the dip opportunities could emerge. Currently, it’s still in an uptrend, albeit sideways, but seeing a surge in OI could also be interesting and likely news, regulatory or legislative event driven.

While Bitcoin’s short-term price action might raise some concern among newer investors and day-traders, the on-chain perspective remains quite compelling.

The #Bitcoin Long-Term Holder Supply remains at an ATH of 14.5M BTC. This suggests mature investors are preferring to accumulate Bitcoin, rather than distribute. pic.twitter.com/VkY9uTAVGG
— glassnode (@glassnode) July 18, 2023

At the same time, the Total Balance in Accumulation Addresses metric has also resumed its uptrend since March 16, when BTC price traded at $25,000.

*Bitcoin Total Balance in Accumulation Addresses (BTC). Source: glassnode*

Readers should also note that the metric also shows the total balance in accumulation addresses increasing since January 2022, when Bitcoin price was trading at $47,800 per coin. What is apparent is that through the worst of the crypto market collapse and Bitcoin price sell-off, multiple on-chain metrics show investors continuing to increase their allocation to BTC.

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

Bitcoin price correction was overdue — Analysts outline why the end of 2023 will be bullish

February 10, 2023 Coin Telegraph

Coin Telegraph

BTC and the crypto market will continue to battle with strong headwinds, but analysts explain why Q3 and Q4 of 2023 could turn out well for Bitcoin.

Bitcoin (BTC) price and the wider crypto market corrected at the start of this week, giving back a small portion of the gains accrued in January, but it’s safe to say that the more experienced traders expected some sort of technical correction.

What was unexpected was the SEC’s Feb. 9 enforcement against Kraken exchange and the regulator’s announcement that staking-as-service programs are unregulated securities. The crypto market sold-off on the news and given Kraken’s decision to close up 100% of its staking services, traders are concerned that Coinbase will eventually be forced to do the same.

The real question is, does this week’s price action reflect a change in the trend of bullish momentum seen throughout January, or is the “staking services are unregistered securities” news a simple blip that traders will disregard in the coming weeks?

According to analysts at analytics firm Delphi Digital, crypto is set up for a “roller coaster ride in 2023.” Analysts Kevin Kelly and Jason Pagoulatos explained the start of the year price action as being fueled by “recent increases in global liquidity” which are favorable to risk assets, but both agree that macroeconomic headwinds will continue to negatively impact markets until at least the third quarter of 2023.

*Major asset classes year-to-date normalized % change. Source: Delphi Digital*

Beyond the negative news of this week and its impact on crypto prices, there are a handful of metrics that provide some insight into how the rest of the year could be for the crypto market.

DXY comes back to life

The US Dollar index has rebounded from its recent lows, a point highlighted by Cointelegraph newsletter author Big Smokey.

In a recent post, Big Smokey said:

“December’s below expectation CPI print and the upcoming February FOMC and interest rate hike clearly provided the necessary investor sentiment boost to push prices through what had been a sticky zone for months.

But, as shown below, BTC’s inverse correlation with the U.S. dollar index (DXY) says it all. Recently, DXY has been losing ground, pulling back from a September 2022 high at 114 to the current 101. As is custom, as DXY pulled back, BTC price amped up.”

*BTC and DXY weekly price action. Source: Trading View*

Taking a look at DXY this week, one will note that DXY rebounded off its Jan. 30 low at 101 and reached a 5 week high near 104. Like clockwork, BTC topped out at $24,200 and began to rollover as DXY surged.

*DXY. 1-week chart. Source: TradingView*

According to JLabs analyst JJ the Janitor:

“How DXY fares after retesting the 50-, 100-, and 200-day MAs in the weeks to come will provide us much insight into the market’s next move…If it breaks through and holds above its 200-day MA (currently at ~106.45), asset markets will indeed become bearish again, and we could expect November’s lows to be threatened. However, should this DXY back-test fail, either now (at the 50-day) or later, we can take it as confirmation that we have entered into a new macro environment. One where the strong dollar that terrorized us in 2022 is now a neutered beast.”

The Fed pivot takes way longer than investors expect

For months retail and institutional traders have prophesied an eventual pivot from the U.S. Federal Reserve on its interest rate hike and quantitative tightening policies. Some seem to interpret the shrinking size of the recent, and future rate hikes as confirmation of their prophecy, but in the last FOMC presser, Powell hinted at the need for future rate hikes and while speaking to David Rubenstein during a open interview at the Economic Club of Washington, Powell said:

“We think we are going to need to do further rate increases,” primarily because according to Powell, “The labor market is extraordinarily strong.”

According to Delphi Digital analysis, market participants are “playing chicken with the Fed trying to call their bluff” and the analysts suggest that data shows the bond market is signaling that the Fed’s policy too firm.

Generally, equities and crypto markets have rallied when FOMC decisions on rate hikes align with that of market participants for anyone who was breathing and following crypto markets in 2022 will remember that everyone and their mother was waiting for Powell to pivot before going ultra long on large cap cryptocurrencies.

From the vantage point of technical analysis, a retest of underlying support in the $20,000 zone is not a wild expectation, especially after a 40%+ monthly rally from BTC in January.

Based off historical data and fractal analysis, Delphi Digital analysts suggest that there is room for further upside from BTC as “there isn’t a lot of overhead supply for BTC in the $24K - $28K range” and earlier reporting from Cointelegraph highlighted the importance of Bitcoin’s recent golden cross.

While this is all encouraging in the short-term, the reality of certain CPI components remaining sticky and Powell seeing a need for further interest rate hikes due to the strength of the labor market should be a reminder that crypto is not yet in bull market territory. Interest rate hikes increase operational and capital costs for businesses and these increases always trickle down to the consumer. Another consistent and alarming development is the continuance of layoffs in big tech companies.

Banks and major U.S. brokerages continue to spin down their earnings estimates and big tech has a way of being the canary in the coal mine for equities markets, earnings and the rate of layoffs taking place. The high correlation between equities markets and Bitcoin, along with concerning macroeconomic hurdles suggest that there is an expiration date on crypto’s recent mini bull market and investors would do well to keep this front of mind.

If the long-awaited “Fed pivot” continues to remain elusive, certain realities will come to the forefront and they are bound to have a stronger impact on pricing in the crypto and equities markets.

Looking deeper into 2023

Despite the more bearish nature of the challenges listed above, Delphi Digital analysts issued a more positive outlook for the bottom half of 2023. According to their analysis:

“The need for liquidity expansion will become more pressing as the year progresses. Cracks in the labor market will also become more apparent, which will give the Fed cover for a shift towards more accommodative policy. The reversal in Global Liquidity we cited at the end of last year will start to accelerate in response to a weaker growth outlook and concerns over growing fragilities in sovereign debt markets, acting as support for risk assets in 2H 2023. The impact of changes in global liquidity on financial markets tends to lag anywhere from 6-18 months, setting up a more optimistic outlook for 2024-2025.”

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

Bitcoin and Ethereum correct as Bitzlato take down, tech layoffs and economic worries dominate headlines

January 18, 2023 Coin Telegraph

Bitcoin Price

U.S. regulators’ announcement of enforcement action against Bitzlato, a softening stock market and a fresh wave of layoffs in big tech companies resulted in an abrupt correction in the crypto market.

Bitcoin (BTC) price and the wider crypto market corrected as news of coordinated “international cryptocurrency enforcement action” stirred up uncertainty among traders.

Given the number of black swan events and the proliferation of crypto-oriented scams in 2022, most investors expect United States and global regulators to eventually lay down a strong hammer on centalized exchanges and other businesses connected with the crypto sector.

*Crypto market daily price action. Source: Coin360*

At the time of writing, BTC price had dipped to an intraday low at $20,400, and Ether (ETH) gave back its daily gains to trade as low as $1,500.

As shown by the charts below, the revelation that Bitzlato had been shuttered and its founder arrested was a lighter blow than expected by the market and the daily candles reflect a bit of indecision as traders decide whether to re-enter the market.

*BTC/USDT and ETH/USDT 4-hour chart. Source: TradingView*

Additional pressure on crypto assets could also be coming from a dim outlook of the U.S. and global economy in 2023 being issued by banks attending Davos and the escalating trend of big tech companies laying off staff.

Recent headlines from Cointelegraph and CNBC detail Microsoft, Amazon, and financial technology companies laying off more than 60,000 employees in the last year, and on Jan. 18, Microsoft announced another wave of layoffs to the tune of 10,000 employees.

Bitcoin sinks to new yearly low at $16.8K as FTX insolvency fears turn into contagion

November 9, 2022 Coin Telegraph

Bitcoin sinks to new yearly low at .8K as FTX insolvency fears turn into contagion

Binance is buying FTX

BTC and altcoins continue to sell-off, hitting new yearly lows as the collapse of FTX begins to drastically impact investors across the entire crypto market.

Crypto markets crumbled for a second day as the fallout from FTX’s liquidity troubles continued to negatively impact investor sentiment.

Bitcoin (BTC) price fell to a new yearly low at $16,800 as anonymous unconfirmed sources suggested that after a closer review of FTX’s books, Binance could back out of their agreement to acquire the beleaguered exchange.

*Crypto market performance. Source: Coin360.com*

Other factors having a potential impact on the market is a wave of successive liquidations in Solana’s DeFi markets. Earlier in the day, Crypto.com exchange emailed its users to inform them that all Solana blockchain-based USDC deposits were suspended

A notice on the Crypto.com website also said:

“Please be informed that we have suspended deposits and withdrawals of the USDC and USDCT on the Solana Blockchain in the Crypto.com App and Exchange.”

At the time of writing, Solana (SOL) price is down 34% and trades at $16.10. FTX’s native FTX Token (FTT) is also 32% down on the day and trades for $3.78

Daily liquidations data from Coinglass shows $832 million in total liquidations over the past 24-hours, and many traders expect the figure to increase.

*Total daily crypto market liquidations. Source: Coinglass*

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.

3 emerging crypto trends to keep an eye on while Bitcoin price consolidates

October 14, 2022 Coin Telegraph

Coin Telegraph

BTC’s price is range-bound, giving other assets room to gain a foothold in an otherwise down market.

This week, Bitcoin’s (BTC) price took a tumble as a hotter-than-expected consumer price index (CPI) report showed high inflation remains a persistent challenge despite a wave of interest rate hikes from the United States Federal Reserve. Interestingly, the market’s negative reaction to a high CPI print seemed priced in by investors, and BTC’s and Ether’s (ETH) prices reclaimed all of their intraday losses to close the day in the black.

A quick look at Bitcoin’s market structure shows that even with the post-CPI print drop, the price continues to trade in the same price range it has been in for the past 122 days. Adding to this dynamic, Cointelegraph market analyst Ray Salmond reported on a unique situation where Bitcoin’s futures open interest is at a record high, while its volatility is also near record lows.

These factors, along with other indicators, have historically preceded explosive price movements, but history will also show that predicting the direction of these moves is nearly impossible.

So, aside from multiple metrics hinting that a decisive price move is brewing, Bitcoin is still doing more of the same thing it’s done for the past 4.5 months. With that being the case, it is perhaps time to start looking elsewhere for emerging trends and possible opportunities.

Here are a few data points that I’ve continued to be intrigued by.

New rotations will emerge

ETH’s price has lost its luster in the now post-Merge era, and the asset now reflects the bearish trend that dominates the rest of the market. Since the Merge, ETH’s price is down 30% from its $2,000 high, and it’s likely that a good deal of the speculative capital that backed the bullish Merge narrative is now in stablecoins looking for the next investment opportunity.

Aside from ETH being an asymmetrical performer in the last four months, Cosmos (ATOM) also defied the market downtrend by posting a monster rally from $5.40 to $16.85. As covered thoroughly by Cointelegraph, oversold conditions, along with the hype of Cosmos 2.0, backed the bullish price action seen in the altcoin, but this chart continues to capture my imagination.

*ATOM emissions schedule (old vs. new). Source: Cosmos Hub*

According to the revised Cosmos white paper, the current supply of ATOM will dynamically adjust based on the supply and demand of its staking. As shown in the chart above, when Cosmos 2.0 “kicks in” for the first 10 months, issuance of new ATOM tokens is high, but after the 36th month, the asset becomes deflationary.

*ATOM/USDT 3-day chart. Source: TradingView*

From the vantage point of technical analysis, ATOM’s price appears to have hit a local top as the months leading up to Cosmos 2.0 were a “buy the rumor, sell the news” type of event, but it will be interesting to see what transpires with ATOM’s price as the market approaches month 20 in the diagram above.

Keep an eye on Ethereum Network activity

*Ether emissions plummet post Merge. Source: Delphi Digital*

Since the Ethereum Merge, Ether emissions have dropped by 97%, and while the price has pulled back significantly, over the coming months, investors might keep an eye on Ethereum network activity, developments with ETH staking across decentralized finance (DeFi) and institutional products, along with any spikes in gas (connected to network activity).

*Ether supply dynamics. Source: Delphi Digital*

While the price could succumb to bearish pressure in the short term, if the market begins to turn around if new trends trigger increased use of DeFi products, it’s possible that ETH’s price could react positively to those developments.

Post-Merge, BTC price action will likely remain king

While new trends across various altcoins may emerge, it’s important to remember the wider context in which crypto assets exist. Global economies are on the rocks, and persistently high inflation remains an issue in the United States and many other countries. Bond prices are whipsawing, and a looming debt crisis makes its presence known on a daily basis. Risk-on assets like cryptocurrencies are incredibly volatile, and even the strongest price trends in crypto (whether backed by fundamentals or not) are subject to the whimsy of macro factors such as equities markets, geopolitics and other market events that impact investors’ sentiment.

Keeping this in mind, Bitcoin remains the largest asset by market capitalization within the crypto sector, and any sharp moves from BTC’s price are bound to support or suppress the micro trends that might be gaining traction in the market. There is still the possibility of a sharp downside in Bitcoin’s price, so traders are encouraged to calculate investment size according to their own appetite for risk, and while multiple metrics might support opening long positions in various crypto assets, it still seems too early to fully ape in.

This newsletter was written by Big Smokey, the author of The Humble Pontificator Substack and resident newsletter author at Cointelegraph. Each Friday, Big Smokey will write market insights, trending how-tos, analyses and early-bird research on potential emerging trends within the crypto market.

Bitcoin prepares for CPI showdown as BTC price dips below $19K cost basis

October 11, 2022 Coin Telegraph

Bitcoin

BTC price performance declines in line with U.S. equities ahead of classic volatility engendered by CPI data.

Bitcoin (BTC) followed analysts’ predictions with sideways action continuing near $19,000 at the Oct. 11 Wall Street open.

*BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView*

Bitcoin price follows stocks downhill

Data from Cointelegraph Markets Pro and TradingView followed BTC/USD as the pair sat at important support ahead of fresh macro triggers.

Brief dips below the $19,000 mark the day prior had been short lived, with sellers subsequently returning in an attempt to effect a deeper downtrend.

The largest cryptocurrency thus looked to be waiting for external catalysts to determine the price trajectory, these due to begin in earnest from Oct. 12 with the United States releasing economic performance figures.

Oct. 13 remained the key date, however, with the Consumer Price Index (CPI) print for September due.

“As expected, with little to no crypto narrative to follow, crypto has been driven purely by macro forces,” trading platform QCP Capital wrote in its latest market update to Telegram channel subscribers on the day.

“In that regard, all eyes are on the Fed and by extension on CPI print this Thursday, where uncertainty remains high.”

QCP added that the crypto market correlation to traditional risk assets had reached new all-time highs, while against the U.S. dollar, the inverse correlation was also higher than ever before.

The U.S. dollar index (DXY) continued reclaiming lost ground on the day, eyeing $113.30, while in the first hour’s trading, the S&P 500 and Nasdaq Composite Index were down 1.2% and 1.6%, respectively.

*U.S. dollar index (DXY) 1-day candle chart. Source: TradingView*

“Ultimately, as the liquidity tap is tightened fully, core CPI remains sticky above target, and geopolitical risks start to weight in more, Q4 will definitely be more challenging,” QCP concluded about the broader outlook.

"Final bottoming out phase" for BTC

Outside short-term price action, the debate over how and when Bitcoin would put in a macro bottom continued.

This time, it was popular trader and analyst Rekt Capital looking to past halving cycles to determine the timing.

As Cointelegraph reported earlier, current perspectives include the belief that June’s $17,600 reversal marked the macro price floor.

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

“According the Three Macro Triangles, BTC is now in the Final Bottoming Out phase in an effort to form a generational Bear Market bottom,” Rekt Capital commented alongside a comparative chart.

A bottom in Q4 would be chronologically right on schedule, with the prior cycle floor coming in December 2018.

On the way down, meanwhile, analysis is eyeing significant support at Bitcoin’s investor cost basis at $19,000, along with whales’ cost basis at $15,800.

Bitcoin price finally made a move, and fireworks are sure to follow

October 7, 2022 Coin Telegraph

Buy Bitcoin

New crypto market trends are starting to emerge now that Bitcoin and equities markets move closer to make-or-break levels, which will determine the markets’ direction.

This week, Bitcoin (BTC) raised investors’ hopes and then left them high and dry again.

Traders placed a majority of their attention on BTC price pushing through a long-term descending trendline resistance, but according to Cointelegraph analyst Ray Salmond, “BTC price simply ‘consolidated’ its way through the trendline by trading in a sideways manner where price has been range bound between $18,500 and $24,500 for the past 114 days.”

At the time of writing, BTC’s price continues to battle at $20,000, and it’s uncertain whether or not the level will hold as support.

Data from on-chain analytics firm Whalemap shows the three price zones investors should focus on.

*Key BTC price support zones. Source: Whalemap*

Whalemap told Cointelegraph, “So far, the resistance at $20,380 — that is due to a whale accumulation of ~20,200 BTC — has been working quite well, with the latest rejection being almost to the dollar accurate.”

Whalemap elaborated:

“Our support remains unchanged since the drop from $30,000. It lies at $19,174 and was formed all the way back on June 18, 2022, by a staggering accumulation of ~101,300 BTC by whale wallets. There is also one more resistance above $20,380, at $21,543. But first, we need to at least break above $20,380.”

From the perspective of technical analysis, on the daily timeframe, the Bollinger Bands are constricted, BTC futures open interest reached a near-record high above 604,000, and the price is trading outside of a long-term trendline resistance — all of which are signs that a directional move is in the making.

As shown by the chart below, investors’ appetite for risk continues to decline, and it should be no surprise that risk assets are the first to see outflow and be ignored by investors during a bear market.

*Investor risk appetite. Source: Bank of America Global Research*

While BTC’s and Ether’s (ETH) prices have ignored the recent volatility seen in equities markets, United States Federal Reserve policy and the potential for another wave of strong selling in stock markets could trigger the next leg down for the cryptocurrency market.

What’s next for Bitcoin?

At the moment, Bitcoin and the wider crypto market are essentially in a zone where a range of bullish and bearish factors could determine the next direction of the trend.

As mentioned by Delphi Digital, Bitcoin is currently following the trajectory of previous market cycles.

*2018 Bitcoin market cycle vs. 2020 Bitcoin market cycle. Source: Delphi Digital*

Zooming in closer, we can see what Delphi Digital characterizes to be “uncanny similarities to the 2018 cycle.”

*2018 Bitcoin market cycle vs. 2022 Bitcoin market cycle. Source: Delphi Digital*

There are a handful of Bitcoin, crypto market and equities metrics that are showing confluence and support the possibility of a relief rally in the short term, but generally, the overall trend favors the downside. If equities see some relief and rally higher, the tight correlation between BTC, Ether and equities markets would suggest a similar style of price action in crypto.

With that said, a Bitcoin relief rally is likely to be capped at $27,500, where the 200-day moving average resides. The most encouraging short-term actions from Bitcoin would be to either continue in the same range, holding $20,000 and $18,400 as support, or a high volume breakout clearing the current 116-day range with a series of daily closes above the range high at $25,200.

An eventual flip of the 200-MA to support and a series of weekly higher highs on the candlestick chart would be early signs of a possible longer-term bullish reversal, but this seems highly unlikely given the macro headwinds facing Bitcoin.

Bitcoin miner profitability under threat as hash rate hits new all-time high

October 4, 2022 Coin Telegraph

Bitcoin Miners

Analysts say Bitcoin miners’ worst days are probably behind them, but the network's soaring hash rate and the uptick in difficulty are weighing on profit margins.

The Bitcoin hash rate hit a new all-time high above 245 EH/s on Oct. 3, but at the same time, BTC miner profitability is near the lowest levels on record.

With prices in the low $20,000 range and the estimated network-wide cost of production at $12,140, Glassnode analysis suggests “that miners are somewhat on the cusp of acute income distress.”

*Bitcoin network hash rate. Source: Hashrate Index*

Generally, difficulty, a measure of how “difficult” it is to mine a block, is a component of determining the production cost of mining Bitcoin. Higher difficulty means additional computing power is required to mine a new block.

Utilizing a Difficulty Regression Model, the data shows an R2 coefficient of 0.944 and the last time the model flashed signs of the miners' distress was during BTC’s flush out to $17,840. Currently, it hovers near $18,300, which is not far from the price range seen in the past two weeks.

*Bitcoin: Difficulty regression model. Source: glassnode*

The hash rate hitting a new all-time high effectively means that miner margins will be further squeezed and outfits that are unprofitable can either mine at a loss, assuming that BTC’s future price will eventually make up for the cost difference, or they can unplug and wait until either the difficulty drops or energy costs improve.

With the recent rise in hash rate, the difficulty is also likely to rise in the next week, with estimates pointing to a 6% to 10% adjustment.

*Bitcoin network hash rate (left) and projected difficulty adjustment (right). Source: BTC.com*

Shown below are estimations of miner profitability assuming an electricity rate of $0.08 kw/h.

*Bitcoin ASIC profitability. Source: DxPool*

Depending on a miners’ capital costs and operational costs, the profit stats above clearly illustrate the tightrope some miners are attempting to balance on at the moment.

Despite the stress on profitability, independent market analyst Zack Voell suggested that miners with healthy balance sheets are constantly looking for ways to expand their operations and the recent surge in hash rate could be related to Bitmain’s newest S19 XPs coming online.

Miners who aren't broke or suing each other continuing to deploy what they can. Every month has a couple headlines (at least ) about new facilities being planned or energized. And a lot of the new hashrate is from XPs coming online
— Zack Voell (@zackvoell) October 3, 2022

Is Bitcoin in the clear?

What investors really want to know is whether or not Bitcoin price is in the clear or whether there is an elevated risk of another sell-off driven by miner capitulation.

According to Colin Harper, the head of research at Luxor Technologies:

"Miners are still selling in the current environment (for example, Riot sold 300 BTC last month and Bitfarms sold 544 BTC). By my estimation, we're more likely to be driven lower by general selling, not miner selling particularly. If BTC price does go to $10,000, in addition to more miners capitulating via BTC sales, there would also be a lot of rigs flooding the market. We are not trying to single out Riot or Bitfarms, these are just the current updates we have, besides Hut 8, which didn't sell any BTC.”

On the other hand, Joe Burnett, the head analyst at Blockware Solutions, said that the bulk of miner selling has likely passed, which reduces the possibility of another capitulation level sell-off.

Burnett told Cointelegraph:

“I think the small miner capitulation Bitcoin experienced this summer knocked out some weak and overleveraged players. I do not think we will see another significant drop in hash rate without Bitcoin making new lows below $17,600. It doesn't mean individual weak miners won't drop off this year and next, but the new gen rigs getting plugged in will likely be enough to keep hash rate trending upward.”

When asked about the surge in hash rate placing pressure on higher difficulty adjustments and the knock-on-effect on miner profitability, Burnett said:

“For sure. Individual weak players may drop off and get knocked out, but it won't be a significant and sudden "miner capitulation" without a drop in BTC price. Margins are definitely tight.”

According to Glassnode, their model of the “implied income stress of the Puell Multiple, with the explicit stress observation of the Difficulty Ribbon Compression” recently exited the zone where “miner capitulation is statistically likely,” suggesting that another miner-driven sell-off is unlikely at the moment.

*Bitcoin miner capitulation risk. Source: glassnode*

The analysts, however, were careful to stress that the aggregate size of Bitcoin held by miners is near 78,400 and any sharp downside move in BTC price could trigger selling from distressed mining outlets.

So what if Bitcoin price keeps falling! Here is why it’s time to start paying attention

September 30, 2022 Coin Telegraph

Bitcoin

Tune out the noise and focus on the signal. 5 important BTC price indicators are in multi-year “buy zones.”

For bulls, Bitcoin’s (BTC) daily price action leaves a lot to be desired, and at the moment, there are few signs of an imminent turnaround.

Following the trend of the past six or more months, the current factors continue to place pressure on BTC price:

Persistent concerns of potential stringent crypto regulation.
United States Federal Reserve policy, interest rate hikes and quantitative tightening.
Geopolitical concerns related to Russia, Ukraine and the weaponization of high-demand natural resources imported by the European Union.
Strong risk-off sentiment due to the possibility of a U.S. and global recession.

When combined, these challenges have made high volatility assets less than interesting to institutional investors, and the euphoria seen during the 2021 bull market has largely dissipated.

So, day-to-day price action is not encouraging, but looking at longer duration metrics that gauge Bitcoin’s price, investor sentiment and perceptions of valuation do present some interesting data points.

The market still flirts with oversold conditions

On the daily and weekly timeframe, BTC’s price is pressing against a long-term descending trendline. At the same time, the Bollinger Bands, a simple momentum indicator that reflects two standard deviations above and below a simple moving average, are beginning to constrict.

Tightening in the bands usually occurs before a directional move, and price trading at long-term resistance is also typically indicative of a strong directional move.

Bitcoin’s sell-off from March 28 to June 13 sent its relative strength index (RSI) to a multi-year record low, and a quick glance at the indicator compared against BTC’s longer-term price action shows that buying when the RSI is deeply oversold is a profitable strategy.

*BTC/USD weekly chart relative strength index. Source: TradingView*

While the short-term situation is dire, a price agnostic view of Bitcoin and its market structure would suggest that now is an opportune moment to accumulate.

Now, let’s contrast Bitcoin’s multi-year price action over the RSI to see if any interesting dynamics emerge.

*BTC/USD weekly chart. Source. TradingView*

In my opinion, the chart speaks for itself. Of course, further downside could occur, and various technical and on-chain analysis indicators have yet to confirm a market bottom.

Some analysts have forecast a drop to the $15,000–$10,000 range, and it’s possible that the buy wall at $18,000 is absorbed and turns into a bull trap. Aside from that event, increasing position size at the occurrence of an oversold weekly RSI has yielded positive results for those brave enough to take a swing.

Another interesting metric to view in the longer timeframe is the moving average convergence divergence (MACD) oscillator. Like the RSI, the MACD became deeply oversold as Bitcoin’s price collapsed to $17,600, and while the MACD (blue) has crossed above the signal line (orange), we can see that it still lingers in previously untested territory.

The histogram has turned positive, which some traders interpret as an early trend reversal sign, but given all the macro challenges facing crypto, it should not be heavily relied upon in this instance.

What I find interesting is that while Bitcoin’s price is painting lower highs and lower lows on the weekly chart, the RSI and MACD are moving in the opposite direction. This is known as a bullish divergence.

*BTC/USD weekly chart reflecting bullish divergences. Source: TradingView*

From the vantage point of technical analysis, the confluence of multiple indicators suggests that Bitcoin is undervalued. Now, with that said, the bottom does not appear to be in, given that a bevy of non-crypto-specific issues continues to inject weakness into BTC’s price and the wider market. A drop to $10,000 is another 48% slide from BTC’s current valuation near $20,000.

Let’s take a look at what the on-chain data is showing at the moment.

MVRV Z-Score

The MVRV Z-Score is an on-chain metric that reflects a ratio of BTC’s market capitalization against its realized capitalization (the amount people paid for BTC compared to its value today).

According to co-creator David Puell:

“This metric clearly displays the peaks and busts of the price cycle, emphasizing the oscillation between fear and greed. The brilliance of realized value is that it subdues ‘the emotions of the crowds’ by a significant degree.”

Basically, if Bitcoin’s market value is measurably higher than its realized value, the metric enters the red area, indicating a possible market top. When the metric enters the green zone, it signals that Bitcoin’s current value is below its realized price and that the market could be nearing a bottom.

*Bitcoin MVRV Z-Score. Source: Glassnode*

Looking at the chart, when compared against Bitcoin’s price, the current 0.127 MVRV Z-Score is in the same range as previous multi-year lows and cycle bottoms. Comparing the on-chain data against the technical analysis indicators mentioned earlier again suggests that BTC is undervalued and in an optimal zone for building a long position.

Reserve Risk

Another on-chain data point showing interesting data is the Reserve Risk metric. Created by Hans Hauge, the chart provides a visual of how “confident” Bitcoin investors are contrasted against the spot price of BTC.

As shown on the chart below, when investor confidence is high, but BTC price is low, the risk to reward or Bitcoin attractiveness versus the risk of buying and holding BTC enters the green area.

During times when investor confidence is low, but the price is high, Reserve Risk moves into the red area. According to historical data, building a Bitcoin position when Reserve Risk enters the green zone has been a good time to establish a position.

*Bitcoin reserve risk. Source: LookIntoBitcoin*

As of Sept. 30, data from LookIntoBitcoin and Glassnode both show Reserve Risk trading at its lowest measurement ever and outside the boundaries of the green zone.

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