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The Bear Trend Is Back For More: Broker’s Beat Volume #9

Welcome to the 9th issue of the Broker’s Beat. Inside, we discuss the implications of the recent bear trend in the market and talk about some of the fundamental factors that may affect the future of Bitcoin and crypto as we know it.

Read on for more price analysis, mining insight, and news about liquidity in the markets. 

Looking Back At ICOs At The Time Of The DeFi Hype Train

Source: HackerNoon

“People with great ideas and dreams no longer had to be in Silicon Valley chasing and begging VC funds to hear their pitch to get a chance. They no longer had to give up part of their company and shares… and eventually risk losing control over their vision and the way they wanted to do business. 

Now everyone had equal chances to raise money for their project by issuing their own token… 

And that’s what they did, raising $2 billion in just the first nine months of 2017 and leaving venture capitalists fretting about the future.”

How bitcoin met the real world in Africa

Source: Yahoo News

“The shift has boosted his profits, as he no longer has to buy dollars using the Nigerian naira or shell out fees to money-transfer firms. It is also one example of how, in Africa, bitcoin – the original and biggest cryptocurrency – is finding the practical use that it has largely failed to elsewhere.”

Buffett shunned tech for many years until now — would it buoy Bitcoin?

Source: CoinTelegraph

“Most recently, Buffett has made an unprecedented move. Berkshire invested in a tech cloud company called Snowflake ahead of its IPO. Buffett historically stayed out of both tech and IPO markets, and the Snowflake deal suggests a shifting trend.

Berkshire’s Snowflake deal does not carry a direct comparison with Bitcoin or cryptocurrencies. But it shows that Buffett has started to consider the digitization of many major industries.”

Adam Curry Tells Joe Rogan to Get At Least One Bitcoin Before Upcoming Apocalypse

Source: CryptoGlobe

“In yesterday’s episode of the “Joe Rogan Experience” (JRE) podcast, Adam Curry, who along with Dave Winer is consider to have invented podcasting in 2003, talked about Bitcoin with Joe Rogan, the American comedian and UFC color commentator.”

We’re entering a more volatile phase for Bitcoin for several reasons right now. Last week, we saw the beginning of a market correction, and this week we’ve gone through several tests of the $10k support level. We discussed this in this week’s Digital Asset Digest

We discussed how this could be the potential for the beginning of a bearish trend, but the 5-day chart below looks far more optimistic. You can see the 2 points where BTC/USD dropped below $10k, as well as a few times that it has been tested in the last 3 days. 

The price is currently sitting around $10,400 and RSI has just gone into the overbought zone earlier this morning. We foresee good things for Bitcoin in the coming weeks as tensions grow, but there is definitely a strong resistance level around $12k. 

With miners unloading lots of their BTC last week, it’s clear that tensions are intensifying in the markets. It seems like Bitcoin could just as easily double as it could half right now. 

The technical analysis shown above feels mostly like while some major fundamental factors work themselves out. Global investment dynamics are changing as China announces that they’re unloading U.S. Treasuries and we start to head back to normalcy after COVID.

Nothing new or exciting is happening with the hash rate distribution, but we want to include the below chart from Blockchain.com to illustrate how things have calmed down a bit.

As you can see, BTC.com is still in a dominant position. F2Pool has gained some market share and is a close second behind BTC.com. Basically, not much has changed here. 

What is exciting to report on is the Kazakhstan government’s decision to invest $700 million into Bitcoin mining. With 13 active mining farms and 4 more on the way, the country is making moves in the space that might indicate a longer-term trend of countries getting involved in the mining space. 

China still has hash rate dominance by a significant amount (65.08% as compared to the United States with 7.24% in second), but even paying attention to this metric indicates that it will have worth in the future. 

Shortly after we released last week’s issue, the hash rate started to climb, eventually hitting a new high of approximately 140 EH/s. 

This is a positive indicator after we saw a drawdown in the price of Bitcoin nearing the end of last week. It shows that miners are still confident in the coin and are continuing to devote more resources to it. 

The 30-day hash rate shown above illustrates the highs that hash rate is hitting. This occurred in a time of lower network difficulty before it could adjust, and bitcoins were being mined nearly every 8 minutes, as opposed to the regular 10 minutes.

We’ve included an annual chart below to illustrate that the hash rate has been trending up for at least the last six months. It’s hitting higher highs now and the peaks indicate that the strength of the network will continue to increase over time.

This week, we want to focus on what the retail investor may be doing over the next few months. It was recently highlighted in an article by Forbes how many crypto exchanges reported receiving $1,200 deposits after the first stimulus checks went out in April (for that exact amount). Now, the thought is that with another stimulus check planned, that could lead to more money being funneled into crypto by new investors.

The article goes on to say how this would lead to an overloading of the network, and how it can’t handle that much new action at a time, but that seems far less likely to happen. If there is a new stimulus, then we can expect to see a boost in Bitcoin prices as many retail investors try to “hedge” themselves. At the same time, there are many who are treating this like a lottery ticket. 

Both of these mentalities will lead to more money entering the market, but we’re doubtful that it will be at a rate that is so high that the market can’t handle it. Additionally, podcaster Adam Curry spent a significant amount of time on the Joe Rogan podcast pushing Bitcoin and its use in “the apocalypse”. 

These are slightly different from our normal liquidity discussions but are relevant nonetheless.

That concludes this week’s Broker’s Beat. We hope you learned something, got a few new talking points to work with, and have some inspiration for what to look into today.

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