Welcome to the 58th issue of the Broker’s Beat. This week, we analyze the preparation for Bitcoin’s big Taproot upgrade, what it would mean for the network and how it will affect ETH’s price by the end of the year.
BY THE NUMBERS
“Hong Kong-based BIT Mining Limited has made another mining investment outside of China. The mining company announced that it has entered into a membership interest purchase agreement to invest in a data center in Ohio.”
‘A new study from the New York Digital Investment Group (NYDIG) has projected that Bitcoin’s energy consumption will remain below 0.5% of the global total over the next decade.” ‘
Source: The Block
“Iceland-headquartered bitcoin mining firm Genesis Digital Assets has raised $431 million in a strategic funding round led by investment firm Paradigm. “
“Compass Mining has launched a service for consumers to purchase bitcoin mining equipment for their home as an alternative to having to pay remote hosting facility fees to mine $BTC.”
“The amount of electronic waste generated by the Bitcoin network is comparable to the amount of discarded electronic equipment in a small country like the Netherlands, a study published by the academic journal Resource, Conservation and Recycling states.”
Bitcoin flow across the crypto markets exchanges and wallets for this week have indicated the further market dip that occurred between Sept. 19, 2021 to Sept. 21, 2021. During this period, the spot price for BTC against USDT tanked from $48K to retest a support level of $40K. Let’s take a closer look at what the chats have to say about this.
Here, we see the chart showing the exchanges reserve for BTC across all exchanges. In this chart, we’ll observe that as the price of BTC dipped from $48K to $40K, the value for all exchanges Bitcoin reserve increased from 2.37M to 2.38M BTC. This increase signifies that there’s an overall increase in the amount of BTC held by traders in all exchanges. As a result, there will be more BTC available for trading with alt coins and margin trading.
Again, when we take a look at the BTC netflow chart for all exchanges illustrated above, we see that there’s been a flip in the negative BTC netflow value of -1.3K BTC on Sept. 19, 2021 to consistently positive daily BTC netflow values between Sept. 20 – 22, 2021. Positive Bitcoin netflow value indicates that the amount of BTC inflow into all exchanges is greater than the amount of BTC flowing out. This is congruent with the findings made in the previous chart for BTC exchange reserve values in that this one also implies that more traders are willing to sell their BTC and purchase alt coins.
The Bitcoin network energy consumption is estimated to remain below 0.4% of the global energy consumption values as we continue into the decade. By 2030, experts believe that there will be even less energy consumption and carbon emission by Bitcoin mining compared to the global values. This is due to the continuous shift towards greener mining operations and development of renewable BTC mining rigs.
The Bitcoin mining hashrate value has seen considerable gains since it crashed along with the China crackdown occurrence in early July 2021. From the BTC hashrate chart above, there was a little dip between Sept. 20, 2021 and Sept. 22, 2021 from 139.5m TH/s to 134.4 TH/s.
As we mentioned earlier, there was a retest of the $40K price level on the BTC/USDT chart this week. Several technical and fundamental factors come into play as we experienced three successive red daily candles from Sept. 19, 2021 to Sept. 21, 2021 before the market recovered back to its current price levels of about $44K. Market fluctuations are always expected and this does not come as a surprise to experienced traders and long-term HODLers. Let’s review some important news that has affected or has the potential to dictate the market trend as we head into Q4 for 2021. We still maintain a bullish stand as we head into the end of the year.
Amidst the fear and volatility in the crypto space, the biggest news for this week has to be the Bitcoin Taproot upgrade. This major BTC upgrade was approved by miners globally and will kick off in Nov. 2021 and will potentially introduce smart contracts to Bitcoin. This will improve transaction privacy on the Bitcoin network.
It is important to note that the smart contracts for Bitcoin will be ushered in by Dfinity’s Internet Computer ICP cryptocurrency. There is also a possibility of Bitcoin ETFs by end of the year and it will be the first time BTC ETFs will be approved in the United States. We expect it to be massive.
Bears believe there is a potentially bearish setup for Ethereum based on the recent TA head and shoulders pattern. However, as we have discussed in the past there are several factors that makes us maintain a bullish stand for Ethereum going forward including the introduction of the EIP-1559 that makes ETH deflationary. We also expect a lot of upgrades in the ETH network that will also reduce the gas fees significantly and believe we may see massive gains above the $5K ETH price by the end of 2021.
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, let’s get the conversation started.
The Secure Digital Markets Team