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Market Wrap: Traders ‘Buy the Dip’ as Bitcoin Hovers at $9,000

Bitcoin fell for a second day, extending a downdraft triggered by Wednesday’s revelation that a member of the cryptocurrency community from the blockchain’s earliest days in 2009 had moved a long-dormant cache of coins. 

As of 20:30 UTC (4:30 p.m. ET), bitcoin (BTC) was trading at $9,044, a loss of 5.6% over 24 hours. 

Bitcoin remains well below its 10-day and 50-day technical indicator moving averages — a signal of bearish sentiment. 

At 14:00 UTC (10 a.m. ET) the world’s oldest cryptocurrency began experiencing high selling volume on exchanges including Coinbase, dropping bitcoin below $9,000 for the first time since May 13.

btcmay21
Bitcoin trading on Coinbase since May 19
Source: TradingView

While the market appears to have turned bearish, Rupert Douglas, head of institutional sales at asset management firm Koine, said he planned to “‘buy the dip” — a popular phrase for accumulating an asset when prices drop in the belief that they’ll soon start going up again. 

“In a way I was hoping for this,” Douglas said in an email. “I’m a buyer at $9,000, as this is shaking out the weak longs before taking it higher.” 

Read more: What I Learned the First Time I Lost a Million Dollars

Volatility in the notoriously fickle bitcoin market has declined since collapsing in March, when the devastating economic toll from the coronavirus started to become clear.   

“I wouldn’t call this a dump,” Darius Sit, managing partner at crypto quantitative fund QCP Capital, told CoinDesk via a Telegram message. “It’s nowhere near statistically significant.”  

btc-volatility-may-20-2020
Bitcoin volatility since 1/1/20
Source: CoinDesk Reserch

The price drop could take a toll on the profitability of bitcoin miners, already hurting from a revenue cut following last week’s rewards halving. The miners have had to rely more on transaction fees to maintain revenue. 

minerfees
Bitcoin miner revenue from fees the past three years – dotted line is halving event
Source: Glassnode

Fortunately, fees are up post-halving, said Marc Fleury, CEO of digital asset brokerage Two Prime. 

“Transaction fees associated with moving bitcoin around have increased from 60 cents to upwards of $5, providing some income for the miners,” he said. 

Read More: Why Kyber Network Tokens Tripled to $100M Despite Coronavirus

Fleury said many bitcoin miners are counting on a price increase to stay profitable. “This has historically happened in the past two halvings, within a span of 18 months,“ said Fluery. “It will take some time for the market to adjust.”

Other markets

Digital assets on CoinDesk’s big board are in the red Thursday. The second-largest cryptocurrency by market capitalization, ether (ETH), lost 5.6% in 24 hours as of 20:30 UTC (4:30 p.m. ET). 

ethmay21
Ether trading on Coinbase since May 19
Source: TradingView

The biggest losers in 24-hour trading were cardano (ADA) slipping 7.6%, iota (IOTA) losing 6.5% and neo (NEO) down by 6.1%. All price changes were as of 20:30 UTC (4:30 p.m. ET) Thursday.

In the commodities sector, oil is trading up 1.4%, with the price of a barrel of crude at $33 at press time. Oil has experienced a wild ride in 2020, up 101% the past month yet still down 44% for the year to date. 

Gold is in the red today, with the yellow metal falling 1.2% to $1,725 at the close of New York trading. 

Read More: Genesis Trading Buys Crypto Custodian Vo1t in Bid to Become Prime Broker

In the U.S. the S&P 500 fell less than 1% on the day, but still up over 2% since Monday despite U.S. jobless claims coming in at over 2.4 million for the past week, the seventh weekly increase. 

U.S. Treasury bonds slipped Thursday. Yields, which move in the opposite direction as price, were down most on the two-year bond, falling 5.6%.

In Asia, the Nikkei 225 index ended its trading day down less than a percentage point on losses in the real estate and transportation sectors. Trading of Europe’s largest public companies by market cap on the FTSE Eurotop 100 index was also down less than a percent, dragged down due to continued coronavirus uncertainty

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Market Wrap: Bitcoin Rebounds to $9,500 After Scary Sell-Off

Bitcoin suffered a quick sell-off on Wednesday after a previously dormant address moved some of the earliest-mined coins for the first time. While bitcoin’s price has recovered a bit, downward selling pressure remains and could have an impact on stakeholders, especially in the derivatives and mining sectors.

As of 20:00 UTC (4 p.m. ET), bitcoin (BTC) was trading at $9,529, a loss of 1.2% over 24 hours. Bitcoin moved below its 10-day and 50-day moving averages on high selling volume. It’s a signal of bearish sentiment after bitcoin dropped as low as $9,100 earlier in the day on spot exchanges including Bitstamp.

btcmay20
Bitcoin trading on Bitstamp since May 18
Source: TradingView

After a few days of prices staying pretty much flat, bitcoin trading activity has picked up. However, that activity was mostly from sellers after one of the oldest bitcoin addresses suddenly showed signs of life, moving up to 50 BTC around for the first time in 11 years. That caused a quick 7% price drop within an hour

Read More: 50 BTC Just Moved for First Time Since 2009 

This sell-off reminds traders to keep track of the oldest addresses in the bitcoin network, says Jose Llisterri, co-founder of crypto trading platform Interdax. “This occurrence highlights the importance of ‘address watching,’ monitoring the addresses of whales/early miners and the so-called ‘Satoshi coins’ mined in the first months of bitcoin.” 

As of now, there is no evidence the 50 BTC were moved by accounts held by the pseudonymous “Satoshi Nakamoto,” the founder (or founders) of bitcoin. 

While the price of bitcoin was able to recover some from the dip, stakeholders such as Mostafa Al-Mashita, head of business development for digital asset management firm Secure Digital Markets, are concerned the crypto market may be heading lower. “Coins from 2009 moving on-chain have definitely spooked some speculators about early players cashing out their coins,” said Al-Mashita. 

Such selling also compounds losses because of leveraged derivatives positions that get liquidated. This dynamic is what exacerbated bitcoin’s massive drop in March to below $4,000 when BitMEX liquidations wiped out leveraged traders who were long crypto. Over $40 million in liquidations occurred during the time of bitcoin’s 7% drop Wednesday. 

skew_bitmex_xbtusd_liquidations-3
BitMEX liquidations the past three days
Source: Skew

Another group of stakeholders watching the price carefully are miners. Bitcoin’s mining difficulty adjusted on Tuesday, a 6% drop in the computational resources needed for machines on the network to produce new coins. Mining difficulty is how much computational power it takes for miners to mine for bitcoin. 

Read More: Bitcoin Just Got Easier to Mine, but for How Long?

Since the halving, bitcoin’s total daily rewards has been reduced from roughly 1,800 down to 900 BTC. Miners are more sensitive to price than ever before, despite the recent easing of difficulty. 

Christopher Thomas, head of digital assets at Swissquote Bank, senses bitcoin’s price is too high despite today’s selling activity. “I’ve felt we’ve been hanging around the $9,900 level without any conviction for the last week or so,” he told CoinDesk. ”We’ll likely move lower to the support levels around $8,000 and possibly further to $7,300.”

“The lower we go, the more sell volume from the miners. As their profit margins lower, they are forced to sell a higher percentage of coins,” added Thomas.

Other markets

Digital assets on CoinDesk’s big board are mostly in the red Wednesday. Ether (ETH), the second-largest cryptocurrency by market capitalization, was down less than a percent in 24 hour trading as of 20:05 UTC (4:05 p.m. ET).

ethmay20
Ether trading on Coinbase since May 18
Source: TradingView

The biggest digital asset dips in 24-hour trading were tron (TRX) slipping 2.8%, monero (XMR) down 2.8% and ethereum classic (ETC) losing 2.6%. Gainers on the day include zcash (ZEC) climbing 1.7%, cardano (ADA) in the green 1% and dash (DASH) up less than a percent . All price changes were as of 20:05 UTC (4:05 p.m. ET) Wednesday.

Read More: Why $4M Dai Made From WBTC Matters for DeFi’s Maturation

In commodities, oil is making large gains, with the price for a barrel of crude up 5% at press time. Gold traded flat, with the yellow metal gaining less than a percent, priced at $1,749 at the close of New York trading. 

Asia’s Nikkei 225 index closed trading Wednesday up less than a percent as mixed trading performances were attributed to Japanese business confidence hitting lows not seen in ten years. In  Europe, the FTSE Eurotop 100 index of the largest companies by market capitalization closed the day up 1%. 

In the U.S. the S&P 500 gained 1.6% on the day, up over 3% for the week. “Equities have had a good run,” says Rupert Douglas, head of institutional Sales at digital asset firm Koine. “I think that the Nasdaq might get to around 9700. If equities then sell off, I’m looking for BTC to be uncorrelated and rally strongly.”

U.S. Treasury bonds were mixed. Yields, which move in the opposite direction as price, were down most on the two-year bond, in the red 1%.

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Market Wrap: Here’s Why Ether’s Price Has Jumped 65% So Far This Year

While bitcoin (BTC) is often discussed as the cryptocurrency best suited for turbulent times, the price of ether (ETH), the second-largest digital asset by market capitalization, has been substantially outperforming bitcoin since the start of 2020. But ether has much different technical dynamics to consider than bitcoin.

As of 20:00 UTC (4 p.m. ET), ether was trading at $211, a loss of less than a percent over the past 24 hours. The native cryptocurrency of the Ethereum network was close to its 10-day moving averages, a technical indicator signaling sideways trading, with little price movement. Ether dropped as low as $209 earlier in the day on exchanges such as Coinbase, then hit $215 at 11:00 UTC (7 a.m. ET). 

ethmay19
Ether trading on Coinbase since May 17
Source: TradingView

Amid the recent hype about the halving, a once-in-four-years event that reduced the supply of bitcoin and the proclamations of investors like Paul Tudor Jones II that bitcoin is a good investment in an extraordinary economic era, ether’s price has outperformed it. For the year to date, ether is up a whopping 65% while bitcoin has risen 35% for the same period. 

performance-of-btc-and-eth-since-2020
Ether vs. bitcoin price since 1/1/20
Source: CoinDesk Research

A much smaller market capitalization for ether likely helps ignite larger price movements versus bitcoin, says Vishal Shah, a cryptocurrency options trader. “ETH’s materially smaller market-cap, on a nominal basis, thus benefits on the margin.” Ether currently has a $23 billion market capitalization versus bitcoin’s $144 billion, according to data from CoinGecko. 

“Ether has long been tracking bitcoin’s price action, albeit with higher beta. This means that when bitcoin surges in value, ether’s value usually increases as well by an even greater percentage,” said Michael Anderson, co-founder of Framework Ventures. 

Anderson’s firm Framework is focused on decentralized finance, or DeFi, investments. DeFi uses the Ethereum network for various cryptocurrency services such as stablecoins, lending and derivatives. 

Read More: The Government Won’t ‘Kill DeFi’ but FATF Might Compromise Anonymity

The prospect of decentralized financial applications helps fuel interest in ether as an investment, says Danny Kim, head of revenue for cryptocurrency liquidity provider SFOX. “To the extent that ether is outperforming bitcoin and becoming a more active network, a big factor to consider is the DeFi sector,” he told CoinDesk. 

Ether holders can “lock” the cryptocurrency into a DeFi smart contract address to gain yields on various lending and stablecoin applications on the network. Locking ether into DeFi effectively reduces the supply of ether in circulation for trading, a dynamic that reduces liquidity. “DeFi has become incredibly popular, and large portions of ETH are getting locked up as collateral, removing them from the liquid market,” said Framework’s Anderson. 

Indeed, at one time, ether users had locked up over 3.2 million ETH in network smart contracts this year, although that number is down from February highs, according to data analytics firm DeFi Pulse. There are nearly 111 million ETH outstanding. 

ethdefi
Amount of ether in DeFi smart contracts the past year
Source: DeFi Pulse

Nonetheless, traders still prefer bitcoin’s liquidity, regardless of ether’s year-to-date performance. While ether has $42 million in daily volume on spot exchange Coinbase, bitcoin’s volume is almost three times higher, averaging $125 million on the San Francisco-based trading platform. Thus, traders have to carefully balance ether’s profit potential with the fact that its order books are thinner than bitcoin, which can lead to slippage and potential losses when price makes huge swings. In addition, the Ethereum network is planning to go through an ambitious technical transition, Eth 2.0, creating a degree of uncertainty. 

Read more: ErisX Announces Launch of First US Ether Futures Contracts

Sweden-based over-the-counter trader Henrik Kugelberg, is bearish on ether and believes that while Ethereum is the DeFi leader for now, that could easily change. “I have a feeling Ethereum is a giant on clay feet. They have a very hard time agreeing on real important stuff and the technology really needs to move along,” he said. 

“Ethereum, in my eyes, is at a much greater risk of being bypassed [by another cryptocurrency] than bitcoin.” 

Other markets

Digital assets on CoinDesk’s big board are mostly down Tuesday. Bitcoin lost less than a percent in 24 hour trading, priced at $9,663 as of 20:00 UTC (4:00 p.m. ET). 

“We’ve seen some bitcoin halving effects in the past few days as hashrates have begun falling off sharply and transaction fees rising in tandem, but nothing really having any effect on price thus far,” Singapore-based crypto quantitative fund QCP Capital wrote in an investor note Tuesday morning. 

btcmay19
Bitcoin trading on Coinbase since May 17
Source: TradingView

The biggest losers in 24-hour trading are bitcoin gold (BTG) dropping 1.8%, nem (XEM) in the red 1.1% and neo (NEO) slipping 1.1%. The lone cryptocurrency substantially gaining on the board today is cardano (ADA) in the green 2.7%. All price changes were as of 20:00 UTC (4:00 p.m. ET) Tuesday.

Read more: Bitcoin’s Impending Golden Cross May Bolster Bulls: Analysts

In commodities, oil is dropping Tuesday, with the price for a barrel of crude down 1% as of press time. Gold traded flat, with the yellow metal gaining less than a percent and at $1,745 at the close of New York trading. 

goldmay19
Contracts-for-difference on gold since May 15
Source: TradingView

In Asia, Tokyo’s Nikke 225 of the largest companies by market capitalization in Japan closed trading up 1.4%, with the index hitting a two-month high on optimism of a coronavirus vaccine. 

The FTSE Eurotop 100 index closed the day down less than a percent. In the U.S. the S&P 500 lost 1% on the day, although still up 2% on the week after a big 3% rally on Monday. U.S. Treasury bonds backed off on Tuesday. Yields, which move in the opposite direction as price, were all down with the two-year bond slipping most, down 12%.

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Market Wrap: Bitcoin Stuck in High $9K Range as Stocks Soar on Powell Comments

Bitcoin treaded water in the high $9,000 range Monday as stocks rallied and traders wondered when the cryptocurrency would break the five-digit barrier again.

Stocks, meanwhile, got a boost a day after Federal Reserve Chair Jerome Powell talked about continued stimulus efforts for the U.S. economy during a television interview Sunday.

At $9,673 as of 20:30 UTC (4:30 p.m. ET), bitcoin (BTC) was trading down less than a percent over 24 hours. The largest cryptocurrency by market capitalization was close to its 10-day and 50-day moving averages, a technical indicator signaling the price is likely to remain flat in the near term. 

While bitcoin hit $9,958 in early trading on exchanges like Coinbase, it dropped as low as $9,436 and has climbed as high as $9,700 since 16:00 UTC (12 p.m. ET). 

btcmay18
Bitcoin trading on Coinbase since May 16
Source: TradingView

Bitcoin briefly topped $10,000 on May 7 but has not reached such heights since. However, traders are eagerly awaiting a return to five digits because would signal positive momentum, said Josh Rager, a crypto trader and founder of learning platform Blackroots. 

“Bitcoin performed well starting in late April, right before halving, so you can’t expect it to keep running up without some proper sideways action,” Rager said, referring to the much-anticipated, once-in-four-years reduction in regular issuance that took place May 11. “I think if bitcoin can get a close on the daily or weekly above $10,500 that it would be very bullish.” 

As bitcoin ambled along, the big boost to the stock markets took center stage Monday. The exuberance, irrational or otherwise, seems to have come thanks to Fed Chair Powell, who said the U.S. will continue to take unprecedented action to thwart the economic damage from the coronavirus pandemic. 

“The good news is that we have policies that can go some way toward minimizing those effects,” said Powell during a television interview with “60 Minutes.” “And that’s by keeping people and businesses out of insolvency just for maybe three or six more months while the health authorities do what they can do.”

“We can buy time with that. And so I think that kind of support may be appropriate,” Powell added.

Read more: Bitcoin’s 2020 Rally Sends Message to Capitalists

Stocks also got a boost from optimism about a coronavirus vaccine from Nasdaq-traded biotechnology company Moderna. While Asia’s Nikkei 225 was flat in early trading, up less than 1%, the FTSE Eurotop index of largest companies was up an ebullient 4%. The S&P 500 in the U.S. climbed 3%, bouncing back from the past week’s poor performance, its worst since late March. 

sp500-2
The S&P 500 index of U.S. stocks the past six months
Source: Google Finance

Unlike in March, when bitcoin performance appeared to be correlated with stocks, a very strong day for equities doesn’t seem to be helping the digital asset, and getting past that $10,000 psychological barrier might be tough. 

Constain Kogan, a partner at crypto fund BitBull Capital  said that “$9,800 seems the top for the moment. So we might see a bottom of this consolidating trend, which is around $9,250-$9,300.”

coinbasevolumemay18
Coinbase volume the past six months
Source: Skew

However, Henrik Kugelberg, a Sweden-based over-the-counter crypto trader, predicted bitcoin’s lackluster performance won’t last. “I’d say the pressure has been building since the start of the year,” he told CoinDesk. 

Kugelberg invoked the scarcity thesis, the concept of a limit to the amount of bitcoin produced, as a reason to remain bullish.

Read more: Bitcoin Battles for $10K as Gold Prints Over 7-Year High

 “A $10,000 level is not at all a goal to me, not even $15,000,” he said. “There’s no asset like this, imagine we found out no more gold mines can be found and that we have mined all the gold there is?”

Other markets

Digital assets on CoinDesk’s big board are mixed on Monday. Ether (ETH), the second-largest cryptocurrency by market capitalization, gained 2.6% in 24 hours as of 20:30 UTC (4:30 p.m. ET). 

ethmay18
Ether trading on Coinbase since May 16
Source: TradingView

Cryptocurrency winners include cardano (ADA) gaining 5.3%, bitcoin sv (BSV) in the green 4.3% and tron (TRX) up 2%. Losers in 24-hour trading include decred (DCR) slipping 1.5% and stellar (XLM) down 1%. All price changes were as of 20:30 UTC (4:30 p.m. ET) Monday.

In commodities, gold suffered a sell off Monday, as the yellow metal slipped less than a percent to $1,731 at the close of New York Trading. 

Read more: Andreessen Horowitz Forecasts Fourth Crypto Bull Cycle

Oil is making some big gains Monday, up by 9%. “The pandemic resumption plan by the US and Europe has led investors to anticipate that global crude oil demand will increase in the second quarter, boosting crude oil prices,” said Nemo Qin, senior analyst for multi-asset brokerage eToro. 

oilmay18
Contracts-for-difference on oil since May 14
Source: TradingView

U.S. Treasury bonds all climbed Monday. Yields, which move in the opposite direction as price, were up most on the two-year bond, in the green 17%.

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Market Wrap: Bitcoin Dips as Stock Markets Close Lower on the Week

Bitcoin’s steady price gains over the past few days ended Friday. With the halving in the rearview mirror, cryptocurrency traders could consider the impact of a continued global economic slowdown after new data showed retail sales dropped to record lows and unemployment numbers continue to worsen.

The world’s first cryptocurrency is trading below its 10-day and 50-day moving averages, a bearish technical indicator. At press time, BTC was trading down 3.4% over 24 hours at $9,340 00:00 UTC Friday (4 p.m. ET). Bitcoin had experienced steady gains since May 13, yet stumbled in early trading at 02:00 UTC Friday, quickly dropping 5%. Since then, bitcoin clawed back some gains but continues to trend downward. 

btcmay15
Bitcoin trading on Coinbase since May 13
Source: TradingView

“Outside events are much more likely to impact bitcoin’s price, like a possible crash of the economy” because of COVID-19, said Alessandro Andreotti, an Italian over-the-counter cryptocurrency trader. 

Uncertainty still exists in equities amid the coronavirus pandemic, and stock markets have performed poorly this week on the murky economic outlook. Data confirmed that: a drop in retail sales by 16.4% in April, the worst since 1992, and U.S. unemployment claims up over 36 million in the same period. 

See also: Money Reimagined: No, Secretary Summers, Money Privacy Is a Vital Freedom

The S&P 500 U.S. stock index closed down 2.2% for the week, its worst performance since late March. In Europe, the FTSE 100 index of largest publicly traded companies ended trading down for the week 2%. For Asia, the Nikkei 225 of Japan’s largest companies ended the week down overall for the first time since April.

However, not all traditional assets are performing poorly. “Gold and silver are looking strong,” said Rupert Douglas, head of institutional sales at crypto asset manager Koine. Gold is up 2.8% for the week.

goldmay15
Contracts-for-difference on gold the past week
Source: TradingView

“I think bitcoin will be strong, too,” Douglas added. While losing some steam Friday, there is confidence among stakeholders bitcoin can turn things around and its price rise steadily.

One trader points to less leverage in the derivatives market as a sign of that. “The number of open leveraged positions are down between 25%-50% across major exchanges since March,” said Nicholas Pelecanos, head of trading at crypto fund NEM Ventures. 

On Seychelles-based derivatives exchange BitMEX, open interest hit as high as $1.1 billion back on February 9. Since March 12’s bitcoin price crash caused $700 million in automatic liquidations on BitMEX, daily open interest has dropped significantly. On Friday it was at $596 million. 

oimay15
Open interest on derivatives exchange BitMEX the past six months
Source: Skew

To be sure, it appears derivatives traders have less of an appetite for leverage positions specifically on BitMEX, where directional bets can be levered up to 100 times collateral.  

”This gives us a good indication that if a sell-off begins to materialize, it will be of smaller magnitude than what we saw in March,” Pelecanos added. 

Andreotti, the over-the-counter trader, says that despite his concerns about economic disruptions, he sees the upward trend for bitcoin to return soon. “I think it’s going to maintain the same demand. Prices might go up a little bit, around the $10,000 range,” he told CoinDesk.

Read more: Bitcoin’s Hot Again and Crypto Miners Are Hoarding – Or Are They?

The $10,000 level is a key price range to pique the interest of traders wanting to hit the buy button, according to Katie Stockton, an analyst at Fairfield Strategies. “A breakout above $10,000 level would likely give way to improved short-term momentum,” Stockton noted. 

Other markets

Digital assets on CoinDesk’s big board are in the red on Friday. The second-largest cryptocurrency by market capitalization, ether (ETH), slipped 4.2% in 24 hours as of 20:00 UTC (4:00 p.m. ET). 

ethmay15
Ether trading on Coinbase since May 13
Source: TradingView

Losers in 24-hour trading include bitcoin sv (BSV) in the red 4%, iota (IOTA) lower by 3.7% and zcash (ZEC) slipping 3.5%. Ethereum classic (ETC) was the lone winner, up 3.5%. All price changes were as of 20:00 UTC (4:00 p.m. ET) Friday.

Read more: Pantera Capital Crypto Funds Losing Double Digits, Bitcoin Fund Is Up

Oil was trading rose Friday by 5.8%, ending the week up 20% because crude supply adjustments have been positive news. “As major oil-producing countries have inherited the promise to reduce production, the International Energy Agency predicts that the tight supply of crude oil in the second half of this year will support oil prices,” said Nemo Qin, senior analyst for multi-asset brokerage eToro.

oilmay15
Contracts-for-difference on oil the past week
Source: TradingView

U.S. Treasury bonds were mixed Friday. Yields, which move in the opposite direction as price, were up most on the 10-year, in the green 3%.

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Market Wrap: Bitcoin’s Price Up 12% Since the Halving

Bitcoin has seen steady gains in price since the halving took place on May 11. The number of institutional investors trading in the CME crypto options market is a sign of continued interest in this asset class. 

At press time, bitcoin’s price has risen 12% since the reward for bitcoin miners was cut in half.

Over the past 24 hours, bitcoin (BTC) was trading up 6% at $9,689. The world’s first cryptocurrency is chugging higher, with technical indicators including the 10-day and 50-day moving averages above bullish levels since May 13. 

btcmay14
Bitcoin trading on Coinbase since May 12
Source: TradingView

Mark Warner, head of trading for crypto brokerage BCB group, told CoinDesk the price gain is due to continual interest in bitcoin as an asset class, and that the uncertain future faced by miners will take time to shake out

“Broadly speaking, we expect demand for bitcoin to continue growing incrementally and it will take some time for the supply shock to work its way through the market and be reflected in price,” he said. 

Read more: Fund Manager Got NY BitLicense 11 Months After Hiring Its Architect

Bitcoin options open interest on CME, or the total number of outstanding contracts, have spiked since May 5, a sign of institutional interest. On Thursday, options open interest reached a high of $105 million, a huge jump considering average daily interest has been a paltry $13 million since Jan. 13 when first launched on CME. 

optionsinterestcme
Options open interest on CME since the platform began offering the instrument
Source: Skew

Trading on the CME is generally done by well-capitalized investors with experience trading derivatives. The rise in open interest is likely coming from that subset of the market, said Vishal Shah, an options trader and founder of derivatives exchange Alpha5.  “Whoever is behind these purchases is clearly a sophisticated trader,” he said.  

The bitcoin activity uptick on the CME is from traders making bullish bets, says Shah. “The interest is in higher strikes, like May at $10,500 is a popular one,” he said. “There’s a fair chance these are buyers of calls. Interestingly, $10,500 is a key level on the BTC chart, and a move through there is expected to bring some fireworks. It’s no surprise then that the focus is on those strikes.”

Read more: Popular BTC Derivatives Product Goes Live on DeFi’s dYdX

A call gives the owner the right, but not the obligation, to buy a specified amount of an underlying asset at a specified price within a specified time.

btconemonth
Bitcoin trading on Coinbase the past month
Source: TradingView

Prior to the halving, bitcoin briefly broke through the $10,000 barrier. Shah isn’t the only trader predicting another run to that level and perhaps beyond. An uncertain economic outlook is one reason why Henrik Kugelberg, a Sweden-based over-the-counter trader, thinks that will happen. 

“Bitcoin, in my opinion, is undervalued and the [coronavirus] pandemic is very young still,” Kugelberg told CoinDesk. “The upwards line will continue for a good two months, but the ride will be bumpy.”

Other markets

Digital assets on CoinDesk’s big board are mostly in the green on Thursday. Ether (ETH), the second-largest cryptocurrency by market capitalization, gained 3.2% in 24 hours as of 20:00 UTC (4:00 p.m. ET). 

ethmay14
Ether trading on Coinbase since May 12
Source: TradingView

Cryptocurrency gainers include iota (IOTA) climbing 6.2%, dogecoin (DOGE) being a good boy and in the green by 3.2% and nem (XEM), also up 3.2%. Losers in 24-hour trading include lisk (LSK), losing 2.5%, cardano (ADA) in the red 1.2%. and stellar (XLM) losing 1%. All price changes were as of 20:00 UTC (4:00 p.m. ET) Thursday.

Read more: As Fed Swats Down Negative Rates, Bitcoiners Wonder, ‘What If’

In commodities, oil was trading up Thursday by 7% while gold was relatively flat, climbing less than a percent.

In the United States, the S&P 500 index of company stocks was up 1% Thursday. Stocks have traded rather choppily in the past month, yet the American equity benchmark has eked out a 1.8% gain during that time. 

sp500pastmonth
The S&P 500 index over the past month
Source: TradingView

Toby Wu, senior analyst for multi-asset brokerage eToro, sees some positives for U.S. stocks in the near term. “There may be a ray of light as the U.S. plans to push out a new stimulus plan worth $3 trillion. If the plan is passed on Friday, we can expect this to bring some much-needed positivity to the U.S. market,” Wu wrote in a report Thursday. 

U.S. Treasury bonds all slipped Thursday. Yields, which move in the opposite direction as price, were down most on the two-year bond, falling 10%.

In Europe, the FTSE Eurotop 100 index of the largest publicly traded companies closed trading in the red 2%. For Asia, the Nikkei 225 of Japan’s largest companies closed the trading day in Tokyo down 1.7%, weighed upon by poor performers in engineering, chemicals and electronics.

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Market Wrap: Some Miners Face an Uncertain Future Despite Rising Bitcoin Price

Despite a post-halving rise in bitcoin’s price Wednesday, the current value may not be enough to keep less-efficient miners operating, and that could shift market dynamics. 

At press time, bitcoin (BTC) was trading up 2.3% over 24 hours at $9,106. The world’s first cryptocurrency is trading above its 10-day and 50-day moving averages, which is a bullish technical indicator, and has been on a steady uptrend since early trading May 13, 00:00 UTC.

btcmay13
Bitcoin trading on Coinbase since May 11
Source: TradingView

The long-anticipated halving was, “a little uneventful,” said Jack Tan, founding partner at Taiwan-based crypto trading firm Kronos Research. But there has been one bright spot for traders: Bitcoin prices have been going up slowly but surely.

Read more: Bitcoin Steady Near $9K as Trump Touts ‘Gift’ of Negative Interest Rates

But market uncertainty lingers when it comes to cryptocurrency miners. The reward for miners to generate new bitcoin was cut because of the halving to 6.25 BTC, so the business of running machines to secure the network is much less profitable: “I think some of the miners might be in trouble. They just took a 50% pay cut overnight, with prices remaining where they are,” added Tan.

One mining metric that immediately changed after the halving was miner revenue from fees, which jumped from 4.6% right before the halving to 7% Wednesday, according to data provider Glassnode. 

glassnode-studio_bitcoin-miner-revenue-from-fees-120-h-moving-average-1
Miner fee revenues are highest since 2019 – dotted line is the halving event
Source: Glassnode

Miners bowing out of the business may change the dynamics of the crypto market, said Alexander Blum, of Two Prime, a crypto asset management firm. “The difference is that miners’ new net tokens are now not necessarily the primary driving force of sell pressure into the markets,” he said. “That mantle is likely to be taken on by exchanges that make trading fees and have to sell into the market to cover their business expenses.” 

Read more: Derivatives May Have Blunted the Halving’s Volatility Spike

Steady exchange volumes are indicative of the market’s health and whether bitcoin can continue to appreciate post-halving, said David Lifchitz, chief investment officer at quantitative crypto trading firm ExoAlpha.

btcvolcoinbase
Spot volumes on Coinbase the past three months
Source: Skew

“Increasing the scarcity of an asset tends to make it more valuable over time, but only if there’s still demand for it,” said Lifchitz. Bitcoin’s price appreciation seems to be increasing in a world where, year to date, bitcoin is performing better than some traditional assets, Lifchitz added, and the numbers back him up. 

Bitcoin is trouncing the S&P 500 Wednesday, with the index of large-cap stocks down 1.75%. The cryptocurrency is also doing better than gold, which is up less than 1%. For the year to date, bitcoin is up 27%, gold is in the green 13% while the S&P 500 is down 12%.

Other markets

Digital assets on CoinDesk’s big board are flashing green on Wednesday. The second-largest cryptocurrency by market capitalization, ether (ETH), gained 5.4% in 24 hours as of 20:00 UTC (4:00 p.m. ET). 

ethmay13
Ether trading on Coinbase since May 11
Source: TradingView

Other cryptocurrency winners include lisk (LSK) up 7.5%, monero (XMR) climbing 6.7% and iota (IOTA) up by 3%. All price changes were as of 20:00 UTC (4:00 p.m. ET) Wednesday.

Read more: Many Ether Whales Might Be Leaving for Bitcoin

In the commodities markets, oil is trading flat, up by less than a percent following continued production cuts of crude. “Other oil-producing countries in the Middle East have stated that they will also reduce production. Kuwait will reduce production by an additional 80,000 barrels per day while the [United Arab Emirates] will reduce production by an additional 100,000 barrels/day in June,” said Nemo Qin, senior analyst for multi-asset brokerage eToro.

oilmay13
Contracts-for-difference on oil since May 11
Source: TradingView

U.S. Treasury bonds all slipped as yields, which move in the opposite direction as price, fell most on the two-year bond, down 6%.

Read more: Stablecoin Supply Breaks $10B as Traders Demand Dollars Over Bitcoin

The FTSE Eurotop 100 index of Europe’s largest publicly traded companies ended trading down 1.8%. The Nikkei 225 of Japan’s largest companies closed its day in Tokyo down less than a percent as poor performances by large companies in transportation and materials dragged stocks down.

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Market Wrap: Bitcoin’s Price Is Rising Despite a Dull Halving

Bitcoin’s price is starting to make gains after what turned out to be a rather dull halving event. With daily active bitcoin addresses at the highest level since 2018, interest in bitcoin could be heading even higher.

The world’s first cryptocurrency is now trading above its 10-day and 50-day moving averages, a bullish technical indicator. This reversal comes after a huge 10% drop in price on May 10 that led to bearish sentiment ahead of the bitcoin halving, which occurred May 11 at 19:23 UTC (3:23 p.m. ET). At press time, bitcoin (BTC) was trading up 1% over 24 hours at $8,829.

btcmay12
Bitcoin trading on Coinbase since May 10
Source: TradingView

While the halving was pretty much a non-event for most traders, many are keeping an eye on various bitcoin-related statistics beyond price. Difficulty, which determines how demanding it is for mining machines to mine a bitcoin block, is one example. 

“Definitely looking forward to seeing what the next difficulty adjustment is,” post-bitcoin halving, Ethan Vera, CFO of mining company Luxor, said during a Consensus:Distributed session Monday. The next difficulty adjustment, which occurs roughly every two weeks, is due May 19. 

Read more: Dull Bitcoin Halving Salvaged by Satoshi Tribute in Block 629,999

Another metric to watch is the number of active bitcoin addresses. On May 11, the number of active addresses on the bitcoin network totaled 943,869 – the highest number since Jan. 28, 2018, according to data from Glassnode. That was during bitcoin’s frothy 2017-2018 bubble, when prices went as high as $19,915 on spot exchanges like Coinbase.

“When you read that the halving is bullish for bitcoin, it has to be taken with a grain of salt,” said David Lifchitz, chief investment officer at ExoAlpha, a quantitative crypto trading firm. “It may be bullish, but only if interest for bitcoin remains over that long term.” 

Those who became interested in bitcoin as a result of its halving might be tempted to stick around if the price increases.

glassnode-studio_bitcoin-active-addresses-14-d-moving-average
Active bitcoin addresses over the past three years
Source: Glassnode

“Just like the price surges in 2017 that really brought bitcoin to the wider consciousness, the halving could again see a new wave of ordinary investors who are not steeped in computer science or technology,” said Simon Peters, an analyst at multi-asset brokerage eToro. 

Active addresses can’t be attributed to individual holders because exchanges and wallets often generate multiple keys for users. However, all those addresses do mean more activity is occurring on Bitcoin’s network.

Read more: JPMorgan Takes on Coinbase, Gemini as First Crypto Exchange Customers

Of course, some of that growing interest could have nefarious intent, said Constantin Kogan, a partner at crypto fund of funds BitBull Capital. The rise in active addresses could be due to things other than buying bitcoin, such as “money laundering and the need to obfuscate chain analysis,” he told CoinDesk. 

Although it is hard to pin down exactly what all these active addresses are doing, at least some of them have increased trading using more intricate strategies, said ExoAlpha’s Lifchitz. “In 2020, there are more sophisticated institutional traders in the market. They can use futures and options to build complex trades.”

skew_btc_futures__aggregated_daily_volumes-3
Daily volume on bitcoin futures the past year
Source: Skew

Active addresses can be an indicator of increased usage and interest in bitcoin, but it doesn’t just necessarily mean “number go up,” added Lifchitz. “I don’t expect a straight line up for bitcoin in the days ahead. I don’t see a drastic 30% jump in price.”

Other markets

Digital assets on CoinDesk’s big board are in the green on Tuesday. Ether (ETH), the second-largest cryptocurrency by market capitalization, gained 1.6% in 24 hours as of 20:00 UTC (4:00 p.m. EDT). 

ethermay12
Ether trading on Coinbase since May 10
Source: TradingView

Cryptocurrency gainers include stellar (XLM) up a mouth-watering 11%, zcash (ZEC) in the green 6.7% and cardano (ADA) climbing 5.7%. All price changes were as of 20:00 UTC (4:00 p.m. ET) Tuesday.

Read more: CME Says Volume Surge Shows Strong Institutional Interest

In the commodities markets, gold is trading flat, up less than a percent and the yellow metal closed the New York trading session at $1,702. Oil is trading in the green today, up 3% as Saudi Arabia announced Monday it plans to reduce production by 1 million barrels in June in addition to the April OPEC+ cuts that slashed crude supply by 20%.

oilmay12-2
Contracts-for-difference on oil since May 8
Source: TradingView

In the United States the S&P 500 index of large-cap stocks was down 2% on investor uncertainty regarding reopening the economy amid the coronavirus pandemic. U.S. Treasury bonds all fell Tuesday. Yields, which move in the opposite direction as price, were down most on the two-year bond, in the red 8.4%.

In Europe the FTSE Eurotop 100 index closed flat, up less than a percent. A surge in mobile operator Vodaphone shares boosted stocks after the company denied it planned a dividend cut

The Nikkei 225 of Japan’s largest companies ended trading flat, in the red less than 1 percent as transportation and real estate stocks dragged down the index.

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Market Wrap: Where Does Bitcoin Go After the Halving?

Bitcoin’s long-anticipated halving event took place Monday afternoon New York time. Now what?

At the time it took place (19:23 UTC or 3:30 p.m. ET), bitcoin was trading below its 10-day and 50-day moving averages, bearish technical indicators after a huge 10% drop in price on May 10 at 00:00 UTC. This was triggered by an outage striking San Francisco-based exchange Coinbase. At press time, bitcoin (BTC) was trading down less than a percent over 24 hours at $8,677. 

btcmay11
Bitcoin trading on Coinbase since May 9
Source: TradingView

The bitcoin halving, which reduced the new supply of bitcoin generated by cryptocurrency miners from 12.5 to 6.25 BTC per block (a reduction from roughly 1,800 BTC down to 900 BTC per day), arrived amid economic unpredictability due to the coronavirus pandemic. “The international scenario is quite different than in 2016, and bitcoin has never been tested during a global economic crisis. So we can expect anything to happen,” said Sebastian Serrano, CEO of Argentina-based cryptocurrency exchange Ripio. 

Traders are anticipating unpredictability in bitcoin’s price for the short term, and therefore volatility is expected, says Katie Stockton, managing partner of Fairfield Strategies. “We don’t have a big sample size of past halvings, but they generally have a positive impact on sentiment after a short-term period of volatility.” 

Read more: As Bitcoin’s Halving Finally Arrives, a Price Retreat Deflates the Hype

“I think the anticipation of the halving has contributed to the outperformance by bitcoin over the past few weeks, and that a breakout greater than $10,055 is likely to unfold after a few weeks of choppiness triggered by today’s gap,” Stockton added. 

Mati Greenspan, founder of Quantum Economics, wrote in his daily note that the halving may not mean much immediately, but agrees this event will be a meaningful one over a long time horizon. “It is likely to have an impact in the price over the long term, as the reduced daily issuance makes the asset more scarce,” Greenspan wrote.

“Bitcoin mining pools have actually been accumulating ahead of the halving,” Philip Gradwell, chief economist at analytics firm Chainalysis, said Monday on a CoinDesk Consensus:Distributed panel. “Because of the halving, we could have a bit of a liquidity crunch.”

balancespools
Mining pool balances have risen since 2019
Source: Philip Gradwell of Chainalysis

Despite higher volumes on Coinbase prior to bitcoin’s halving, it doesn’t mean volume will continue to rise in the short term, said Christopher Thomas, head of digital assets at Swissquote Bank. “I think we’re now in the zone where no significant retail money will come in this week and I think we’ll trade between $8,000-$9,000 for the next week or so, with a reasonable possibility of a drop to $7,300.”

spotvolmay11
Coinbase volumes over the past month
Source: Skew

Read more: CME Says Volume Surge Shows Strong Institutional Interest

At press time, mining hashpower has yet to see a significant drop. Vishal Shah, an options trader and founder of derivatives exchange Alpha5, is taking a wait-and-see approach. “Until we see a stabilization in mining activity, for which I’d like to see the proof in the pudding, I’m in no hurry to be buying bitcoin.”

blockchainhash
Bitcoin hash rate the past six months
Source: Blockchain.com

Besides looking at how miners prepared for the event, Shah is also keeping an eye on what the miners will do next, including keeping track of how much mining power will now need to be shut off, and how much selling will happen over the next month. Thus, miner incentives are important. “My view has been that reduced rewards are likely to impact miner incentives more than the pedestrian speculator,” he added.

Other markets

Digital assets on CoinDesk’s big board are mixed on Monday. The second-largest cryptocurrency by market capitalization, ether (ETH), gained 1.3% in 24 hours as of 20:00 UTC (4:00 p.m. EDT). 

ethmay11
Ether trading on Coinbase since May 9
Source: TradingView

Cryptocurrency gainers include cardano (ADA) in the green 1.6% and monero (XMR) climbing 1%. Losers include nem (XEM) in the red 2.9% dash (DASH) down 2.3% and decred (DCR) in the red X%. All price changes were as of 20:00 UTC (4:00 p.m. EDT) Friday.

Read more: Hedge Fund Pioneer Paul Tudor Jones Holds 1%-2% of Assets in Bitcoin

In the commodities markets, gold is trading flat, down less than a percent and closed the New York trading session at $1,698. Oil is negative by 2% as crude continues its volatile run in the midst of lower demand. 

oilmay11
Contracts-for-difference on oil since May 7
Source: TradingView

In the United States, the S&P 500 index of large-cap stocks was flat, up less than a percent. U.S. Treasury bonds all climbed Monday, Yields, which move in the opposite direction as price, were up most on the two-year, in the green 9.7%.

In Europe the FTSE Eurotop 100 index of publicly traded companies ended trading flat, down less than a percent as airline and energy stocks dropped.  The Nikkei 225 index of Japan’s largest publicly traded companies closed up 1.1% as the airlines sector saw a boost amid lockdowns easing around Asia.

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Market Wrap: Interest in Bitcoin Rises as Prices Near $10K, but Can It Continue?

The clock is ticking down to the expected halving event on Monday and bitcoin is capturing the interest of investors who may not normally follow the cryptocurrency markets.

At press time, bitcoin (BTC) was trading up less than 1 percent over 24 hours at $9,966 and above its 10-day and 50-day moving averages, bullish technical indicators. The cryptocurrency has spent much of its U.S. trading hours with a $9,900 handle on spot exchanges like Coinbase, a small retreat after briefly breaking above the $10,000 barrier Thursday. 

btcmay8
Bitcoin trading on Coinbase since May 6
Source: TradingView

“Most of the people I know are buying bitcoin and gold as a hedge against global recession. Most likely this trend will continue to grow strong,” said Constantin Kogan, partner at crypto fund of funds BitBull Capital. 

A boost above the $10,000 price level is certainly a big draw if you are interested in bitcoin. What’s more, conversations about the bitcoin reward halving, expected Monday, May 11, have increased in the past week.  Kogan believes bitcoin prices can push up to as much as $12,000 before the halving, an every-four-years event that this time will lower bitcoin’s generation of new cryptocurrency from 12.5 to 6.25 BTC. 

Read More: Bitcoin Halving 2020 Explained

Additionally, investor Paul Tudor Jones II, who manages $38 billion in assets, published an outlook and change to one of his fund’s strategies to reflect trading in bitcoin futures on Thursday. 

“Paul Tudor Jones has written quite a knowledgeable piece on bitcoin. Adoption on Wall Street-fueled halving-FOMO is my bet,” said Henrik Kugelberg, a Sweden-based over-the-counter crypto trader. 

“It’s clearly lots of casual investors coming in and picking it up. I’m even getting friends and contacts asking me again,” said Chris Thomas, head of digital assets at Swissquote Bank.

However, in his note, Jones revealed his fund’s strategy is around bitcoin derivatives, likely on advanced futures platforms like CME, not purchasing spot bitcoin on exchanges like Coinbase. “We have set the initial maximum exposure guideline for purchasing bitcoin futures to a low single digit exposure percentage,” Jones wrote in his outlook titled “The Great Monetary Inflation.”

skew_btc_futures__aggregated_open_interest-1
Bitcoin futures open interest the past month
Source: Skew

Indeed, derivatives such as futures are seeing an uptick, and Swissquote’s Thomas expects an interesting dynamic in the coming weeks. As more investors have conversations on bitcoin’s place in an uncertain global economy, professional traders active in the crypto derivatives market are hedging their bets with both futures and options.

Read More: The Men Who Stare at Charts

The crypto options market is experiencing record highs – over $1 billion – but there are more bearish bets in the form of put options than bullish calls. “Looking at bitcoin options we can see that puts are more expensive than calls,” said Thomas. “This implies that more people are picking up downside protection.”

“New money is driving us higher ahead of the halving and professionals will push us lower afterwards,” he added. “Medium term, still very much bullish, just short term we’re in for a rough ride.” 

Other markets

Digital assets on CoinDesk’s big board are mostly in the green on Friday. Ether (ETH), the second-largest cryptocurrency by market capitalization, less than a percent in 24 hours, trading at $213 as of 20:00 UTC (4:00 p.m. EDT). 

ethmay8
Ether trading on Coinbase since May 6
Source: TradingView

Cryptocurrency winners include neo (NEO) in the green 6.6%, iota (IOTA) climbing 5.5%, and bitcoin cash (BCH) higher by 3.7%. Losers include dogecoin (DOGE) in the doghouse down 2.2% and decred (DCR) losing 1%. All price changes were as of 20:00 UTC (4:00 p.m. EDT) Friday.

Read more: Bitfinex Has a Derivatives Contract With Exposure to Bitcoin Dominance

In commodities, oil mostly traded flat but rallied late, up 4.6% Friday. Gold is trending down today, down less than a percent and closed the New York trading session at $1,706. For the year, the yellow metal is up 13%. 

goldmay8
Contracts-for-difference on Gold since May 6
Source: TradingView

In the United States, the S&P 500 index of large cap stocks was up 1.7% despite the worst jobs report in over seven decades; 20 million people were laid off from work in April and the unemployment rate is now at a devastating 14.7%. U.S. Treasury bonds were mixed. Yields, which move in the opposite direction as price, were up most on the 10-year, in the green 4.8%.

In Europe the FTSE Eurotop 100 index of publicly traded companies ended trading up 2.3%. 

The Nikkei 225 index in Asia ended its day up 2.5%. It’s a surge attributed to positive news surrounding Japanese policymakers planning to subsidize landlords of small businesses up to $20 billion over the next six months. 

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Market Wrap: Bitcoin at $9.9K as Halving Chatter Increases

The price of bitcoin continues its rise ahead of next week’s anticipated halving. That event is trending as a topic on social media, even as few appear to be considering what may happen after it’s over.

At press time bitcoin (BTC) was trading up 6.5% over 24 hours, currently at $9,882. It’s been on a run upward on high volume since 12:00 UTC (8 a.m. ET), moving from $9,270 during that time to as high as $9,971 on spot exchanges like Coinbase. 

btcmay7
Bitcoin trading on Coinbase since May 5
Source: TradingView

Discussion of “bitcoin halving,” the once-every-four-year event that will lower by half the supply of new bitcoins awarded to miners, has spiked higher than ever over the past week, according to social media data tracked by data aggregator LunarCRUSH. “After months of suppression, mentions of the bitcoin halving event on social media have now exploded,” Mati Greenspan, founder of Quantum Economics, noted in a tweet

halvingmentions
Mentions of “bitcoin halving” since 1/1/20
Source: LunarCRUSH

Bitcoin’s price climb could be partially attributed to new investor interest in the midst of the recent economic tumult, says Matthew Ficke, head of market development for cryptocurrency exchange OKCoin. “This halving has received an incredible amount of publicity, far surpassing previous halvings particularly against the backdrop of the traditional financial markets.” 

Read More: Bitcoin Halving Explained 2020

Many newer crypto investors see that, historically, bitcoin’s price has gone much higher, and it can rise to those levels again, Ficke points out. “BTC/USD topped out around $10,400 in October 2019 and February 2020, so it is reasonable to view this as a short-term attraction.”  

btcoct19
Bitcoin trading on Coinbase since October 2019
Source: TradingView

Ficke may be right about the halving being of short-term interest to investors. Darius Sit, partner at Singapore-based trading firm QCP Capital, is not bullish on a soaring post-halving bitcoin price. 

“Regarding halving, we hold the view that impact on price might not be material,” said Sit.

Demand-side buying before the halving has been attributed to “fear of missing out,” or FOMO, as one driver in the crypto market right now. But can it last? Sit is skeptical. “Daily mined supply to 900 BTC, or just under $7 million at these levels, is a small fraction of the current daily trading volume. BTC price would be driven more by demand-side than supply-side dynamics,” he said. 

That supply-side dynamic of the mining business might not look good either, as miners are going to have to make some operational decisions once the halving is complete. 

Read more: Bitcoin Halving Searches on Google Hits All-Time Highs

Many mining machines will become worthless for bitcoin mining because they won’t be profitable after the reward drops from 12.5 to 6.25 BTC, said Zach Resnick, partner at crypto investment firm Unbounded Capital. “Bitcoin miner revenue will go down by close to 50% once the block subsidy is cut in half, which means for all but the most professionalized miners BTC mining will become unprofitable overnight absent a significant run-up in the price.” 

That could mean bitcoin selling might be on the way from smaller miners who can’t hack the halving’s reduction in crypto inflow. “Our view is that the less-efficient miners might capitulate and sell their BTC holdings,” QCP’s Sit told CoinDesk. 

Other markets

Digital assets on CoinDesk’s big board are up on Thursday. The second-largest cryptocurrency by market capitalization, ether (ETH), gained 3.8% in 24 hours as of 20:00 UTC (4:00 p.m. ET). 

ethmay7-2
Ether trading on Coinbase since May 5
Source: TradingView

Cryptocurrency winners include neo (NEO) in the green by 7.2%, monero (XMR) up 7% and dogecoin (DOGE) out of the doghouse, up 5.6%. The lone loser is lisk (LSK) in the red 1.5%. All price changes were as of 20:00 UTC (4:00 p.m. EDT) Thursday.

After remarkable turmoil in the oil market since April, crude is trading sideways, and is down 3.5% in trading Thursday. 

oilapril
Contracts-for-difference on Oil since April
Source: TradingView

Gold is making some gains in trading today, up 2% and closed the New York trading session at $1,716.

Read more: Bitcoin Outperforming Gold and Stocks so Far This Month 

In the United States, the S&P 500 index of large-cap stocks was up 1%. U.S. Treasury bonds all slipped Thursday. Yields, which move in the opposite direction as price, fell most on the two-year bond, down a whopping 25%.

Europe’s FTSE Eurotop 100 index of the continent’s largest publicly traded companies closed up less than a percent. In Asia, the Nikkei 225 index in Tokyo opened trading for the first time this week after a holiday had the markets closed and was up less than a percent with gains in transportation and real estate.

Equities performing either flat or up this week belies the looming danger of an increasingly uncertain global economy, according to Chris Beauchamp, chief market analyst at investment platform IG. “Warnings of terrible economic performance this year have been followed by predictions of a moderate rebound for next year. But as companies around the globe are discovering, it is almost futile to predict what the next few quarters will look like,” Beauchamp said.

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Market Wrap: Derivatives May Reduce Miner Selling Pressure After Bitcoin Halving

With less than a week to go before the expected May 12 halving event, bitcoin’s price is swinging upward. The crypto derivatives market is helping to hedge the uncertainty on which way the bitcoin market will go when miners have less revenue after the halving. 

In early trading at 00:00 UTC, the world’s oldest cryptocurrency was around $8,957 before jumping as high as $9,399 at 13:00 UTC (9 a.m. EDT) on spot exchanges including Coinbase. It was changing hands at a price above its 10-day and 50-day technical indicator moving averages, signaling bullish sentiment Wednesday. At press time bitcoin (BTC) was trading up 3.8% over 24 hours at $9,258.

btcdailymay6
Bitcoin trading on Coinbase since May 4
Source: TradingView

Big-name bitcoin investor Mike Novogratz of Galaxy Digital has been making the rounds this week, talking about how he views digital scarcity driving bitcoin prices higher after next week’s expected halving event. “Next Tuesday we have the bitcoin halving where the inflation rate gets cut in half,” Novogratz said on CNBC’s Closing Bell program Monday. “You talk about inflation in fiat currencies where the [Federal Reserve] is printing money like a money-printing machine and in the bitcoin space the money supply gets cut.”

Read more: Bitcoin Breaches $9.2K as CME Futures Hit 10-Month High

This may be true, but it also means a smaller reward and thus smaller revenue for miners to pay labor, rent and electricity. That’s because they will have fewer bitcoin inflows they can sell for cash. However, in July 2016, the last time bitcoin supply was cut in half, the market was much different. 

Garrick Hileman, an economist and a long-time researcher in the crypto space currently at wallet provider Blockchain.com, says things have changed since the previous halving halving event. For example, CME didn’t start offering bitcoin futures until late 2017.  Ahead of this halving, bitcoin miners can purchase futures contracts, locking in bitcoin prices to pay for their expenditures.

June futures for bitcoin are priced at $9,395 on CME Wednesday, above current spot prices. 

btcfuturesjune
June bitcoin futures on CME
Source: TradingView

“While in theory a decreasing supply and stock-to-flow models may suggest a surge in price, the reality is a lot more complicated,” Hileman told CoinDesk. “A far larger, broader spot and derivatives market means that miner selling is simply less impactful.”

Read more: Bitcoin Halving 2020 Explained

Open positions on CME futures recently hit a 10-month high. However, the U.S.-based platform takes up only a small fraction of the market. The biggest players in the crypto derivatives market — such as Huobi, Binance BitMEX and OKex — are based in Asia and don’t accept U.S. customers. 

skew_btc_futures__aggregated_daily_volumes-2
Daily volume for bitcoin futures
Source: Skew

Vishal Shah, derivatives trader and founder of exchange Alpha5, says futures play a bigger role in crypto than most realize. According to Shah, due to March’s sell-off that triggered $700 million in liquidations on BitMEX, the subsequent reduction in open interest could lessen downside risk caused by post-having selling pressures.

Read more: BitMEX Is Making the Bitcoin Network More Expensive for Everyone

The reduced number of leveraged open interest, which still hasn’t returned to February levels, means fewer automatic liquidations on price movements. 

skew_btc_futures__aggregated_open_interest-4
Open interest for bitcoin futures over the past six months
Source: Skew

“If there is to be any fallout due to lower rewards, at least the leveraged open interest is not there to ‘domino’ the system lower,” Shah told CoinDesk.  

Other Markets

Digital assets on CoinDesk’s big board are mostly in the green Wednesday. Ether (ETH), the second-largest cryptocurrency by market capitalization, was off less than a percent in 24 hours as of 20:00 UTC (4:00 p.m. EDT). 

ethdailymay6
Ether trading on Coinbase since May 4
Source: TradingView

Cryptocurrency winners include decred (DCR) climbing 3.4%, nem (XEM) up 2.2% and neo (NEO) higher by 1.8%. Losers include ethereum classic (ETC) in the red 1.6% and iota (IOTA) down 1.4%. All price changes were as of 20:00 UTC (4:00 p.m. EDT) Wednesday.

The price of oil is down 5%; 2020 has been a terrible year for crude, which is down 60% for the year to date.

oilmay6
Contracts-for-difference on oil since May 4
Source: TradingView

Gold is trading down 1% and closed the New York trading session at $1,687. 

In the United States, the S&P 500 index of large-cap stocks ended trading down less than 1 percent. U.S. Treasury bonds were mixed as the Treasury Department announced a new 20-year maturity. Yields, which move in the opposite direction as price, were down most on the two-year yield, in the red 6%.

Read more: US Arms of Binance, FTX Push Into Margin Trading, but Likely Not at 100x

In Europe, FTSE Eurotop 100 index of the continent’s largest publicly traded companies closed down less than a percent amid poor data on the economy there, particularly retail numbers. “A host of economic releases are highlighting just how dire the economic picture is,” said Joshua Mahony, senior market analyst at investment platform IG.

In Asia, the Nikkei 225 index in Tokyo was closed for holiday. Hong Kong’s Hang Seng index climbed 1% as tech and oil stocks performed well amid coronavirus lockdown easing in the region.

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The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.



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Market Wrap: Bitcoin Volatility Higher Than S&P 500 Again but Lower Than Oil

In the ever-curiouser markets of 2020, bitcoin is only slightly more volatile than the S&P 500 and nowhere close to the bumpy ride oil has been on.

In early trading at 00:00 UTC, the world’s oldest cryptocurrency was in $8,800 territory before jumping as high as $9,125 on spot exchanges like Coinbase.

After that quick run-up, bitcoin quickly sold off back to $8,800 levels at 11:00 UTC (7 a.m. EDT). With 10-day and 50-day technical indicator moving averages signaling tepid sentiment Tuesday, bitcoin is experiencing little trading action, staying at the $8,800 price range. At press time bitcoin (BTC) was trading up less than a percent over 24 hours at $8,945.

btcdailymay5
Bitcoin trading on Coinbase since May 3
Source: TradingView

The sideways action, also known as “consolidation,” is a pattern of predictable behavior during which traders like Jack Tan, founding partner at Taiwan-based crypto trading firm Kronos Research, seek various price levels in which to trade in and out. 

“We are still in a consolidation phase as the next level is $14,000, I believe,” said Tan. “I think $8,400-ish should hold on the daily chart. If not, then it invalidates the bullish thesis.” 

Read more: Bitcoin Briefly Hits $9K, Investors Remain Bullish

For a crypto trader to call a range between $8,400 to $14,000 is a pretty wide guess and a sign volatility could be the name of the game for the next week or two. After a brief period in which the S&P 500 was more volatile than bitcoin, the latter regained its status as the rockier asset last week, though only slightly so. On Tuesday, the S&P 500 index of U.S. stocks was up less than a percent. 

volatility-btc-stocks
30-day historical volatility for bitcoin and S&P 500 since 4/1/20
Source: CoinDesk Research

Bitcoin volatility rising a bit since late April is likely making it harder for traders to figure out what’s going to happen before and after the network’s once-in-four-year reward halving from 12.5 to 6.25 BTC, set for approximately May 12. 

Pascal Gauthier, CEO of cryptocurrency hardware wallet maker Ledger, said his company has been doing brisk sales of devices and solutions for investors to store crypto ahead of the 2020 halving. It’s something he witnessed four years ago, in July 2016, when the bitcoin reward dropped from 25 to 12.5 BTC.

Read more: Bitcoin Mining Difficulty Nears All-Time High in Before Halving

“Despite external pressure on the stock market, we had our best April ever.” said Gauthier. ”The crypto market continues to climb, in a trend very similar to what we saw pre-halving in 2016.” 

Despite the cryptocurrency’s reputation as a risky, volatile asset, in these unprecedented and often unpredictable times oil is actually much more volatile than either the S&P 500 or bitcoin – by a large margin. 

volatility-btc-oil-stocks
30-day historical volatility for bitcoin, S&P 500 and oil since 4/1/20
Source: CoinDesk Research

The massive spike in oil volatility arrived in April following a historic tumble in price for a barrel of crude to as low as $2 on the open market. Oil is having another double-digit price gain Tuesday, up 12.8% and priced at $26.54 as of 20:20 UTC (4:20 p.m. EDT). Chris Beauchamp, chief market analyst for online trading at investments provider IG, doesn’t expect oil’s volatility to subside anytime soon, either. 

Read more: Amid Economic Meltdown, Bitcoin Winning as ‘No Value’ Buffett Eats Crow

“Everyone was clearly too bearish down at $10 and lower,” Beauchamp said. “But with the price up almost three-fold from its April low, the polar opposite risk now looms. Storage constraints and oversupply problems have not disappeared, while demand is only set to recover modestly.” 

Other markets

Digital assets on CoinDesk’s big board were mixed Tuesday. The second-largest cryptocurrency by market capitalization, ether (ETH), lost less than a percent in 24 hours as of 20:20 UTC (4:20 p.m. EDT). 

ethdailymay5
Ether trading on Coinbase since May 3
Source: TradingView

Winners include iota (IOTA) up 1% and lisk (LSK) in the green less than a percent. Cryptocurrency losers include tron (TRX) in the red 1.6% and ethereum classic (ETC) down less than a percent. All price changes were as of 20:20 UTC (4:20 p.m. EDT) Tuesday.

Read more: As Tether Supply Hits Record Highs, It Moves Away From Original Home

Gold is trading up less than a percent and closed the New York trading session at $1,708. 

U.S. Treasury bonds were mixed. Yields, which move in the opposite direction as price, were down most on the two-year, coming into the red at 3.9%.

The FTSE Eurotop 100 index of the largest European companies was up 2.1% on optimism in the energy sector, despite oil’s volatility.  

The Nikkei 225 index in Tokyo was closed for holiday. The Hang Seng index in Hong Kong closed in the green 1% as the region prepares for coronavirus restrictions easing and many businesses set to reopen later this week.

Disclosure Read More

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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