Daily crypto news alerts for 7th January, 2021
🗞Bitcoin is above $36,000. What's next? Bearish and bullish factors
Today, around midnight Moscow time, Bitcoin has once again renewed its own highs, this time above $36,000. The total capitalization of the cryptocurrency market for the first time exceeded the $1 trillion mark. Overall, analysts maintain positive expectations for bitcoin in the short term, while agreeing with signs of overbought.
Former member of the Board of Governors of the Federal Reserve System Kevin Worsh told CNBC that a lot of money flows into bitcoin from gold: “I think if you are under 40, bitcoin is the new gold for you. I think it makes sense to have bitcoin in your portfolio under these circumstances, when the most fundamental change in monetary policy is taking place since Paul Volcker. I'm not surprised that bitcoin does what it does. "
Today's rise in bitcoin comes alongside the unrest in the US. There, supporters of Donald Trump broke into the building of Congress, where a meeting was held to approve the results of the presidential election. “I'm looking at the bitcoin price. Did you raise it to $36,000? Current conditions are exactly what it was created for. The time has come, ”writes market maker I am Nomad.
Analyst Willie Wu says the rally is already "warm" but not yet overheated. It refers to the excess of the bitcoin price over the NVT indicator, which is calculated as the ratio of capitalization to daily transaction volume. This excess is now below the 2013 and 2017 bull market peaks.
“This is how high the 'speculative premium' is now compared to similar phases in the previous two bull markets. The NVT premium shows the ratio of speculators and investors in the appreciation of the rate, he writes. - Notice how the speculative premium exceeded normal values in 2018-2019, when BitMEX led the rise in derivatives dominance. Later, it declined due to the arrival of Michael Saylor in the spot market. "
Analysts at Glassnode say the MVRV Z-Score, used to measure bitcoin's current to fair value, has recently climbed sharply to above 5. It is currently at the levels of the 2017 main bull market, but is still well below its highs. Having reached level 5 then, the price of bitcoin increased 10 times over the next 6 months.
Analyst Alex Saunders noted that Bitcoin and Ether trading volumes on the PayPal app recently hit a new high of around $110 million in a single day. While Google Trends data suggests that search engine user interest in cryptocurrency is still far from historically high, retail investor activity is high.
“Demand from retail investors for BTC and ETH is skyrocketing. The general public is starting to catch the wizarding internet money fever right in the middle of the influx of institutional capital, ”writes Saunders.
Rafael Schulze-Kraft, CTO of the Glassnode analytical platform, said that 78% of existing bitcoin coins are illiquid, that is, not available for sale in the market.
“Only 4.2 million BTC (22%) are currently constantly in circulation and available for purchase and sale,” he wrote. - If you look at the changes over the last year, it becomes obvious that the illiquidity of bitcoin is growing. This suggests that the current bull market is supported by incredible volumes of illiquidity. "
There are two main factors that can contribute to a bearish trend reversal: a slowdown in institutional money inflows and cascading liquidations.
The bitcoin futures market has reached a new high in active positions above $11 billion. High leverage in trading increases the likelihood of short or long positions squeezing. Funding rates in the futures market indicate an increased use of borrowed funds by the holders of long positions, who, in the event of a noticeable fall in the exchange rate, can add up one after another and intensify the downward movement. In a balanced environment, funding rates are around 0.01%, but now they are closer to 0.15%, which is a very significant deviation.
The CEO of the CryptoQuant analytical platform, Ki Yong Joo, believes that Bitcoin may undergo a correction when the inflows of institutional investors' assets reach a local maximum. In particular, he suggests paying attention to the excess of the price of bitcoin on the Coinbase exchange over the average market and the outflow of capital from it as evidence of investor activity. Recently, the excess of the indicator is $100 - 200, and on January 2, the maximum outflow was recorded for all time.
The Chicago Mercantile Exchange (CME) and LMAX Digital, focused on serving institutional investors, are setting new records in daily trading volume with values above $2 billion each, which also indicates continued demand.
Thus, fundamental indicators continue to only strengthen over time, however, an increase in the share of marginal long positions creates risks of a cascade liquidation at any time.
🗞Price Analysis: Litcoin LTC for 07/01/2021
Since Bitcoin surpassed the $37,000 mark in the hours before the press time, many of the altcoins in the market have recorded significant peaks in their trading prices. This was the case with popular alternative assets such as Litecoin, Ethereum Classic and NEO, with prices rising up to 20%.
Litecoin prices are up nearly 5 percent in 24 hours, with cryptocurrencies trading at $169.9 after the market value hit $11.3 billion. While there was significant bullish momentum behind the currency, the cryptocurrency faced strong resistance in the $173 price range. However, if the bulls fail, the LTC price may have to rely on nearby support at $147 and $135.
The EMA loops likely helped the exchange rate as they fell below the trading price of the press period and are likely to provide support. The MACD indicator also looked good after the bullish crossover.
🗞China first showed hardware wallet to work with digital yuan
The first images of a hardware wallet for working with the digital yuan of the People's Bank of China appeared on the network. They were shared by Twitter account cnLedger , which specializes in local news from the cryptocurrency industry.
As you can see in the presented images, the wallet has the form of a bank card, and in order to make a payment, it must be attached to the terminal. It also has a small electronic display.
cnLedger explains that the first line of the display shows the payment amount of 2 RMB, the second shows the balance of 127.85 RMB, and the third shows the number of available payments without connection and Wi-Fi or cellular network.
“Although e-CNY uses blockchain, it is a centralized substitute for the M0 money supply (notes, coins). Anonymity and offline payments ensure that only the People's Bank of China can track cash flows. In the future, sellers will be able to reject AliPay / WeChat Pay, but they are not allowed to reject e-CNY payments, ”writes cnLedger.
Information that in addition to the mobile application for interacting with the digital yuan, other methods may be offered, appeared in September. The hardware wallet was supposed to allow large amounts of digital yuan to be stored without an internet connection, which is difficult to implement in a mobile app.
In the description, the tool was described as a tangible asset activated at the request of a client at a bank counter or in a digital channel for transferring digital currency. The wallet can be used to make payments, deposit and withdraw money from bank accounts, as well as to transfer transactions between users. At the same time, it was reported about a four-tier system that will potentially determine how much money the owner can spend.
On January 4, it became known about the next initiative of the Central Bank of China to prepare for the massive launch of its digital currency. Shenzhen residents were asked to participate in a municipal lottery to win one of 100,000 "red envelopes", each containing 200 digital yuan ($31). Such envelopes will be active for 10 days, and digital currency can be spent at 10,000 points of sale. In this case, however, we are talking about using a mobile application, not a hardware wallet.
🗞Cryptocurrency market capitalization exceeded $1 trillion for the first time in history
On the night of January 7, Bitcoin reached a new price record, followed by a rise in the price of most altcoins. Against this background, the capitalization of the cryptocurrency market for the first time in history crossed the $1 trillion mark.
According to CoinMarketCap, the cryptocurrency market was $1 trillion 22 billion. Most of this indicator remains with bitcoin - $696 billion. Ethereum and Tether are in second and third places with indicators of $138 and $22 billion, respectively.
Bitcoin dominance in the market is 68.5%. At the time of writing, Bitcoin is trading at $36,800.
🗞Bitcoin hashrate hits new high amid miners' revenues increase to $33 million per day
Bitcoin miners' income rose to $33 million per day. Above this mark, the value was only for five weeks during the entire existence of the cryptocurrency during the market rally at the end of 2017.
“Bitcoin miners are happy,” writes Raphael Schulze-Kraft, CTO of the Glassnode analytical platform. "From the last halving until October, the average daily income of miners was $10 million. So much for the spiral of mining death."
As early as December 16, 2020, the income of miners per day was $17 million.Since then, the value has grown by 90%. The price of bitcoin has increased by 82% during the same time. For comparison, in November 2017, miners' revenues were $17 million, rose to $50 million on December 18, after which they dropped to $16 million in mid-February 2018, along with the collapse of the exchange rate.
At the same time, Blockchain.com data indicates that the Bitcoin network hash rate is currently 148 EH / s, which is the largest value in the history of cryptocurrency and is 10 times higher than the December 2017 figure.
As you can infer from these two metrics, despite a 75 percent rise in the price of bitcoin from the 2017 highs, mining profitability per unit of computing power has declined significantly since then. So, on December 22, 2017, it reached $3.56 per TH / s, and now only $0.22, while being at the highest level since September 2019.
The current hashrate growth continues the trend seen since November 2020, when the amount of computing power began to increase again after the end of the rainy season in China and the completion of the migration of miners. According to BTC.com forecasts, on the next recalculation after 3 days, the difficulty of mining bitcoin will increase by 8.21% and as a result, it can also update historical highs.
Other fundamental metrics at the blockchain level also show positive dynamics. For example, the number of active addresses has come close to the 2017 maximum of about 1.2 million. The price of bitcoin is at the same time at $35,300, having once again renewed records of about $36,000 earlier today.