Welcome to the 50th issue of the Broker’s Beat. This week, Paraguay is on the verge of becoming the second country to accept BTC, while we eagerly await Ethereum and Cardano’s upcoming upgrades.
BY THE NUMBERS
“Cathie Wood, the founder, and CEO of Ark Invest has tossed her viewpoint over Bitcoin’s mining energy consumption, citing it as a minor setback to the asset’s path in the future.”
Source: The Block
“Renewed data compiled by the Cambridge University supports the notion that China’s global bitcoin mining dominance was already fading before the country’s recent crackdown.”
“Yesterday, Zilliqa’s mainnet underwent an urgent upgrade to fix an issue that was causing its mining nodes to run out of memory when processing large smart contracts on the protocol.”
“Compass Mining has announced the signing of a 20-year partnership deal with nuclear fission startup Oklo. The deal will see Oklo provide the bitcoin mining operation with up to 150 megawatts of clean energy.”
“Greenidge Generation has made millions of dollars mining somewhere between 3.8 to 4 Bitcoin per day at its Dresden, NY facility. Critics have argued the facility damages the local environment, and even undermines New York State’s climate goals.”
THE BITCOIN BEAT
A snapshot of Bitcoin’s spot price as of this writing is $31,791.13 representing a 6.24% decrease in trading volume since July 14th at 9:15 AM. The 30-day volatility of BTC is 62.83%. Bitcoin remains the top cryptocurrency trading with a support at $27,000 and resistance at $36,000.
ETH is trading at $1,911.88 as of this writing, representing a 24-Hour decrease of 4.13%, and 30-day volatility of 83.62%. Over the last 24 Hours, the trading volume increased by 15.59%. As of today, ETH holds 17.29 % of the cryptocurrency market, making it the second-largest coin traded. It has a circulating supply of 116,675,503 coins, an increase of 50,368 overnight.
A careful study of the BTC inflow chart for spot exchanges shows that this week, more crypto investors were willing to trade with their BTC than hold it long term in other wallets.
This is evidenced by the steady increase in the amount of BTC transferred to spot exchanges wallet from 2.1k BTC on July 10, 2021, to 5.6k BTC on July 11, 2021. One would assume that was probably the end of it but we saw a further spike to 14.9k BTC on July 12, 2021, and then to 15.4 BTC on July 14, 2021.
The netflow chart for spot exchanges also proves this point. The total amount of BTC netflow has remained positive since July 12, 2021 and is now at 2.5k BTC on July 14, 2021. This metric tells us that there has been an increasing selling/trading pressure for BTC in the past week. We can see this in the slight dip below 32k USD on the BTC/USDT chart.
As the day passes by, we’re getting more news about the cracking down of China on bitcoin mining in its different provinces that will affect the hashrate going forward. Just this week, another province of China called Anhui reported a further ban on any form of crypto mining in a bid to curb energy consumption.
As we saw last week, the hashrate value touched a 1-year low of 84.79m TH/s due to the China ban placed on mining in several other provinces. Miners have relocated abroad from Asia to other western countries and began to seek other green mining solutions within states like Texas, US for example. The total hashrate chart is now bouncing off and we may be seeing a recovery as we progress.
Experts believe that the exodus of mining rigs from China and the diversified location of new crypto mining industries is a blessing in disguise for the crypto space. More big institutions will be willing to get into the crypto space as we hit the goal of 50% clean mining energy.
With the market still in a sideways pattern as seen on the charts, investors are now beginning to really wonder if Bitcoin is truly a hedge against inflation. We witnessed the biggest monthly gain in June 2021 since August 2008, as the US price index increased to 5.4% including food and energy. Also in Argentina, there’s been an inflation of about 50%. There have been more bills printed in recent times especially due to COVID19. Amid all these, Paul Tudor Jones allocated another 4% of his portfolio to cryptocurrencies, which is a huge vote of confidence for crypto in general.
Another big news is that Paraguay is poised to become the second South American country (after El Salvador) to accept BTC as legal tender. We expected the passing of this Bill on July 14, 2021, however, reports have revealed that this bill is nothing like what El Salvador proposed. The bill had 22 articles and highlighted major regulatory processes for trading BTC and other alt coins, which were referred to as “virtual assets”, “cryptoactive”, and “cryptocurrency” in the bill proposed. Perhaps the most discouraging part about this bill was where it clearly stated that BTC would only be recognized as ‘property’ and not ‘legal tender’, which BTC maxis may not find amusing.
There are major concerns about the upcoming biggest unlock that is scheduled to happen on July 18, 2021. Grayscale Bitcoin (GBTC) is set to unlock a total of about 40,000 BTC throughout July and there are worries regarding the effect this would have on the price of Bitcoin’s spot market prices. Kraken exchange stated that the GBTC shares unlock may not have as much effect on the BTC prices, if any at all. What’s more, we could even see an uprise in BTC spot price and a retest of the higher resistance level above 33k.
Arguably the most trustworthy stablecoin firm in the crypto market, Circle is set to go public in the NASDAQ market. Circle is the company that issues USDC, which is one of the safest stablecoin because it is backed by Goldman Sachs and is constantly regulated and audited for confirmation that it is fully backed by a sufficient US Dollar reserve in the bank. This will help give more credit to other stablecoins like USDT and dampen the FUD around the Central Bank of China’s concern regarding the credibility of stablecoins.
As we edge closer to the EIP-1559 Ether upgrade, more institutions have started to offer Eth 2.0 staking to their customers. The Ethereum London hard fork set to launch on August 5, 2021, is becoming increasingly on every trader’s mind. This upgrade will turn Eth into a deflationary asset. Simple supply and demand tokenomics will apply and less supply with the increased demand will mean that Ethereum prices will surge.
Another top cryptocurrency that is expected to see an upgrade is Cardano, as we expected to see the Alonso smart contract testnet go live in August. However, founder Charles Hoskinson has revealed in a recent video that this date may have to be delayed till September which isn’t too far off. We expect to see a supply shock of ADA as many projects start to adopt the Cardano smart contract main net once it goes live.
That’s all for this week! If you have any questions about what we talked about here or would like to explore trading with us, please reach out here.
The Secure Digital Markets Team