Spot Crash Out of China: Broker’s Beat Volume #45

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Welcome to the 45th issue of the Broker’s Beat. This week, we talk about the spot crash coming out of China and how that’s affecting hash rate and mining revenue.

Before you get started reading this digest, be sure to register for our free upcoming NFT Summit on June 1st/2nd.


BY THE NUMBERS

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SNIPPETS

The Bitcoin Mining Council, Saylor, And Musk: What Transpired In The Meeting?

Source: Bitcoinist

“The jury is still out on whether that meeting between the two gazillionaires and “the leading Bitcoin miners in North America” was positive or nefarious. Part of the Bitcoin community interpreted it as a shrewd PR move and supported the Bitcoin Mining Council. The others smell centralization, are suspicious of closed-door meetings and rejected it. However, what do we really know about the meeting?”

Elon Musk not right person to lead green Bitcoin debate, Nic Carter says

Source: Coin Telegraph

“Castle Island Ventures’ Nic Carter doesn’t think Elon Musk is the right person to lead the “clean Bitcoin“ debate ‘possibly not as far as the Bitcoin community is concerned.’ ”

Crypto miner BitDeer blocks China users as Beijing gets tough on sector

Source: Forkast

“BitDeer, one of China’s biggest crypto mining operators, late last night blocked access to its platform by anyone using a mainland Chinese IP address. Its blocking measure comes on the heels of a government clampdown on mining, and other companies in the industry have begun following the BitDeer’s move.”

Sichuan Government to Discuss Bitcoin Mining Ban

Source: U.Today

“The Sichuan regulatory office of China’s National Energy Administration will hold a virtual symposium on June 2 in Chengdu to discuss the implications of shutting down Bitcoin mining in the province. ”

Iranians Now Have to Buy Bitcoin, Can’t Mine After Temporary Ban

Source: TrustNodes

“Iran has become the first country in the world to temporarily ban bitcoin mining after a drought led to dams producing 57% less energy than last year.”


THE BITCOIN BEAT

BTC/USD

In the last 24 hours bitcoin has been trading slightly positive, reaching a 24 hour high of $40,490.50 and a 24-low of $37,247.90, indicating a potential bullish trend. However, Bitcoin’s trading volume saw a decrease of -5.39% and as of this writing, Bitcoin represents 43.01% of crypto-market capitalization. As bitcoin trades above $40,000USD, the next level of resistance is anticipated near the upper bound of $42,000 which is around the 200-day moving average. As of this writing, the Bitcoin spot price is $40,123.41 with 30-day volatility measured at 0.90.

ETH/USD

Ethereum spot price as of this writing is $2,854.48 with a 24-hour trading volume of $38,694,574,087.80 USD, representing a 24-hour trading volume decrease of -13.83%. In the last 24-hour ETH traded in the range of 24L $2,642.61 to 24H $2,888.75, the 30-day volatility is 1.66. As of this writing ETH market dominance is 18.79% representing the second-largest cryptocurrency traded


INFLOW/OUTFLOW MONITOR

We’ve been celebrating the dropping BTC reserves in exchange for months now, but that trend has reversed a bit. You can see in the chart below how BTC reserves have increased to levels not seen for almost 3 months.

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At the same time, stablecoin reserves have grown significantly and we can see USDT up $14.2B, USDC up $9.72B, and DAI up $1.22B. All of these indicate buying appetite waiting on the side, which could mute the bearish sentiment you can see with the BTC reserves.

It should be noted that it’s our belief that the recent comments from China on its expected “crack-down” on BTC mining are to blame for Sunday’s sell-off. This sell-off is related to spot sells, with only $465 million in liquidations this time around. Given the growing number of mining rigs for sale in China, as well as the chart above indicating an increase in Bitcoin sent to exchange accounts from known miner wallets, we can assume that miners are converting bitcoin to fiat to pay bills associated with transferring their operations outside of China. They were previously net holders, but this dynamic has quickly shifted in the last week.


HASHRATE ANALYSIS

Right now, we’re starting to see the Bitcoin hash rate recover after a pretty drastic drop. This drop was caused by a combination of two factors. First, last week’s flash crash was a massive confidence killer for the space and hash rate generally follows drops in price. Second – and more importantly – China is planning on cracking down on mining operations in their city.

Often this ends up being a paper tiger situation, but we’re already seeing some banks unbanking miners, and it could get worse. The 30-day hash rate chart shown below illustrates the drop and attempted recovery.

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To add to this dynamic, you can see how mining revenue is dropping rapidly in the 30-day chart below.

revenue 1

The recent drop and retracement combines with other business factors to bring uncertainty to the mining business, and this will take some time to fix itself.


TRADER’S DIGEST

There are two big news items we’d like to draw to your attention. First, users will soon be able to withdraw Bitcoin from PayPal to third-party wallets. Jose Fernandez da Ponte spoke at the CoinDesk Consensus 2021 conference on Wednesday. PayPal does not currently allow users to move their Bitcoin holdings off the platform.

Additionally, a recently released interview with Ray Dalio revealed that he holds a BTC position.

According to Dalio, the relative value of bitcoin vs gold is one measure of its value. He estimated that gold is worth $5 trillion, or five times the value of bitcoin. According to him, the only way to avoid mounting debt is to increase production.


That’s all for this week! If you’re free on June 1st and 2nd, our free NFT Summit is taking place on those days. We’ve got a great list of speakers lined up, and you’ll be an NFT expert by the time the summit is over.

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