Bitcoin Halving In 5 Days, U.S. National Debt To Hit $25 Trillion
A lady checking latest prices of Bitcoin digital currency outside Bitcoin ATM machine in Rzeszow’s … [+] Millenium Shopping Mall. A week ago, the Bitcoin (BTC) situation was looking not good, with a possibility of a further drop to $6,000 that began to circulate between traders. Now, Bitcoin appears to have stabilized and traders expect a strong move to $8,500 over the coming days. On Thursday, October 3, 2019, in Rzeszow, Poland. (Photo by Artur Widak/NurPhoto via Getty Images)
Bitcoin, born from the Global Financial Crisis (GFC) of 2007-08, is now outperforming stocks and gold. With the bitcoin halving event scheduled to take place in 5 days, all eyes are heavily focussed on bitcoin, an asset that has only 21 million bitcoins in existence.
During the bitcoin halving, block rewards are cut in half from 12.5 to 6.25. To recoup the block reward reduction price loss, bitcoin miners postpone selling their bitcoins in order to sell them at a more profitable price several months, up to a year later.
In effect, supply is reduced on a month-by-month basis and each month after the halving, bitcoin becomes extra scarce. As a consequence, assuming that the demand stays the same, then the price of bitcoin will naturally increase each month. And, this is exactly what happened during the 2 previous bitcoin halvings.
It is expected that the price of bitcoin will reach an astronomical all-time new high. Dan Morehead, the CEO of Pantera Capital believes that there is a 50% chance that bitcoin could go up, and go up big, predicting that it could hit a whopping high of $500,000 by August 2021.
Why is this bitcoin halving different?
Whether or not Morehead is correct, that is still yet to be seen. One thing is for certain, bitcoin is bitcoin, meaning that anything could happen. That said, the third bitcoin halving is unlike the previous 2 halvings due to the following factors in play:
The Federal Reserve has just announced new plans to print $3 trillion to bankroll the economy. According to the U.S. National Debt Clock, U.S. debt is about to hit $25 trillion. If the Fed continues to print money, then trust in money in the near future might very well be eroded.
Nikolay Shkilev, the CEO of Zelwin says, “Now, a lot of people believe that the ‘issuance of new money’ is not provided with anything of value—which violates all economic laws. In fact, the printing of money could be equated to printing new candy wrappers. This is why it is inevitable that people will start looking for alternative sources of financing like crypto.”
In response to the Fed’s actions against corporate debt, Warren Buffett says, “I think in general they’re the right thing, but I don’t think they’re without consequences, and I think they could be of extreme consequences if pushed far enough. But there would be kind of extreme consequences if we didn’t do it as well.”
Stablecoins and crypto-dollarization
Not long ago, the Financial Stability Board (FSB) published a report with recommendations for “Global Stablecoin” (GSC) oversight. As a result, the wider crypto community has interpreted this to mean that there could be a potential upcoming ban on stablecoins due to the complexities of fiat-collateralized and crypto-collateralized stablecoins.
Stablecoins are vital to the crypto ecosystem, especially for unbanked countries and crypto traders. Unbanked countries are using stablecoins to combat local inflation; whereas, crypto traders are using stablecoins for liquidity, to buy cryptocurrencies like bitcoin during dips.
Fredrik Johansson, the founder Libonomy says, “Stablecoins are like a transitional stage between cryptocurrency and fiat. They are still on the blockchain, they are easy to use, and they are pretty anonymous. At the same time, the stablecoins price is stable, and they are more reliable for short-term capital storage.”
Johansson adds, “The government is afraid that soon more and more people and companies will start using stablecoins or other cryptocurrencies, which means they will get out of control. But I think that this process still cannot be stopped. The crypto community is growing every year, and prohibitions cannot solve this problem.”
Nobel Prize winner and renowned American economist Professor Milton Friedman famously once said, “I think the internet is going to be one of the major forces for reducing the role of government. The one thing that’s missing but that will soon be developed is a reliable e-cash.” Could this be bitcoin, or perhaps something else? Here are some big questions to think about:
If the Fed continues to print money in the next 1-2 years, at what point (I.e. Printing 10, 50, or 100 trillion dollars) could make people lose faith in the dollar? How will the current economic climate impact the bitcoin’s price during the halving? Could the bitcoin halving event, combined with intense economic uncertainty result in a new class of millionaires?
Author: Luke Fitzpatrick
Bitcoin USD (BTC-USD) Stock Price, Quote, History & News – Yahoo Finance
Bitcoin goes into the weekend after an extraordinary week of price action that has seen it defy all odds by testing the $9,600 level of resistance. The world’s largest cryptocurrency seems to be rallying going into the halving event, which is now just 10 days away. If Bitcoin can manage to float back above the $9,600 level and close the weekly candle at around $10,000 it would confirm a bullish breakout above a two-year level of resistance, indicating strength and momentum leading into the rest of the month. The diagonal trendline dating back to December 2017 suppressed price action during the $14,000 high in 2019 as well as the $10,600 high earlier this year. This means that it will need
Bitcoin Mining Difficulty Nears All-Time High in Final Adjustment Before Halving
Bitcoin sell-off looms ahead of block reward halving
Analyst: Key Signs Show There’s a “Good Chance” Bitcoin Is Fully Bullish
Since hitting $9,500 last week, Bitcoin has entered a consolidation pattern around $9,000. The cryptocurrency has traded between $8,700 and $9,200 for days, failing to decisively break out of this range.
Some say this is indicative of a market top. Yet others believe Bitcoin is poised to rally even higher, citing technical signals.
One analyst even said that considering a specific indicator, there’s a “good chance” BTC is fully bullish.
Since the lows in March, Bitcoin has entered a very steep recovery. Just seven weeks after the worst cryptocurrency crash ever, and BTC is up well over 100%, recovering the bulk of the downturn.
It’s a stunning reversal that has left many wondering if it’s a relief rally or a reversal into a bull run.
This move could be the start of a full-blown bull trend, according to a top trader. Commenting to his Telegram channel in reference to the chart below, he wrote that “there is a good chance we are actually in full bull territory.”
Although the name of the indicators used isn’t clear, the chart depicts two clearly positive signs for Bitcoin.
- Bitcoin has moved out of a buy zone. This is a trend that was last seen in December 2019 and April 2019.
- The bottom indicator recently saw a bullish crossover. The indicator last did this at the $7,000 bottom at the start of 2020.
As this crossover just took place, it shows that BTC has room to rally.
Adding to the positive technical confluence, a top trader says that the cryptocurrency has crossed above key levels:
- The yearly volume-weighted average price.
- The 200-day simple moving average.
- And the one-day Ichimoku Cloud.
Also bullish are Bitcoin’s fundamental trends, which a top firm says will boost the cryptocurrency in the year ahead.
In a research note on cryptocurrency published Thursday, David Grider said his firm is bullish on Bitcoin moving forward, specifically citing the halving as a positive catalyst:
“We’re bullish over the next 12 months and expect prices may continue moving up into the [halving] and possibly after.”
Grider is currently the lead digital strategist at Wall Street analysis firm Fundstrat Global Advisors.
Co-founder of Fundstrat Tom Lee echoed the optimism.
In a tweet, the analyst said that Bitcoin’s year-to-date performance proves that it is not only benefiting from the halving, but is also acting as a “solid risk-on asset and as a hedge against calamity”:
“Bitcoin has acted extremely well. YTD, it is outperforming equities by a sizable margin. So proving itself both as a solid risk-on asset (look at today) and as a hedge vs calamity.”
With governments printing trillions of dollars to boost the economy, it makes sense that a decentralized asset gains intrinsic value.
Photo by Roman Nguyen on Unsplash
Author: Nick Chong
Bitcoin halving could bring way more mining back to North America
The halving is certain to flush out inefficient miners and recalibrate the global share of hashrate. Will miners in North America benefit from a collapse in China?
Chinese mining pools currently account for 65% of Bitcoin’s hashrate, while their North American counterparts make up roughly 15 percent of hashrate, according to data from CoinShares. But industry experts tell Decrypt that China’s beleaguered mining sector—whose problems will be exacerbated by the halving next week, when miners’ rewards are cut in half—has created a hashrate tug-of-war that could shift the balance of power to North America.
While Chinese miners are financially over leveraged, and suffering from supply-chain shortages affecting next-gen ASIC equipment, miners in North America are enjoying new sources of cheap and renewable energy—and increased appetite from North American investors.
The halving will likely impact how over-leveraged Chinese miners (those who took out loans for most of their operational capacity instead of paying in cash) do business, driving many of them out of the market or forcing them to restructure their operations to compete.
Depending on the Bitcoin price going into the halving, these miners will risk bankruptcy, even those with next-generation hardware.That’s because they will have to spend most of their mining rewards on their debt obligations, so they’ll be the first to be washed out when their revenue is cut in two.
“Chinese miners are generally more leveraged than North American,” Ethan Vera, a pool operator at North American Luxor Mining Pool, told Decrypt. “It’s clear that they are highly levered because during the fall in crypto prices in March, almost all of them margin called.”
Matrix Port, the newest venture from Bitmain co-founder Jihan Wu, also makes loans to many of China’s biggest miners, Vera confirmed. These miners may have access to the cheapest electricity in the world, but that won’t matter if all of their revenue goes toward paying off their debt.
As these operations implode, mining firms in North America (especially when they finally rig up new machines) will fill the gaps in hashrate.
Denis Rusinovich, who operates an 80-megawatt mining operation in Kazakhstan, expects that, once many more new generation ASICs come on line, this “will [have a] major impact [on] hashrate redistribution for the next 12 months.” He elaborated that, if the Bitcoin price is high after the halving (around or above $8,000), then inefficient miners will have a reprieve, but if Bitcoin is trending towards $4,000, then he expects we could see “price wars” wherein larger farms come out on top over smaller ones, something that could risk centralizing mining in China further.
Even with Bitcoin at $9,000, it’s likely that this halving will hurt North America “pretty bad in the near-term,” Vera told Decrypt, “but it will be good in the mid-term.”
Samson Mow, the Chief Strategy Officer of Blockstream, agreed, adding that “[w]e’re already seeing a large segment of Bitcoin mining move to North America.” These include Blockstream’s operations, a 300 MW joint-operation between its Quebec and Georgia facilities. Munich-based Data AG (formerly, Northern Bitcoin AG) has established its own 300MW facility in Rockdale, Texas. With 300 MW total capacity, these are some of the largest Bitcoin mining facilities in the world.
Other examples of North America’s burgeoning mining sector are not too hard to find. One firm, Upstream Data, is selling mining rigs to oil drillers to help them make better use of flare or vented gas. Another company, VBit, is establishing a 200 MW facility in Alberta, Canada.
Mow expects this wealth to run over into the ASIC’s chip manufacturing business, as well, saying “it’s inevitable” that “major ASIC companies setup manufacturing facilities in North America in the coming years.”
Despite this activity, Mow does not expect any immediate “shakeout” that will redistribute hashrate. Instead, the process will be gradual. But it will mean that North American will continue to emerge as China’s primary rival, and he anticipates that this competition will be in the hardware manufacturing realm as well as the mining industry itself.
“The least efficient and least capitalized miners will struggle and possibly shut off,” Mow said. “We saw this happen during the March drop in Bitcoin’s price. Hashrate dropped, difficulty dropped, and the more efficient miners mined more Bitcoin. When the price recovered, the hashrate also started to recover. The system works just as intended and it favors the most efficient players.”
This hashrate diaspora could come from a widespread bust in over-leveraged mega-mining farms in China. Accustomed to the rapid growth that has come to define China’s perpetually-booming economy over the past few decades, Chinese investors have a higher risk appetite than their American counterparts, Vera said.
But American investors are increasingly perceiving Bitcoin as more of an opportunity than a risk. As this perception changes, and over-leveraged operations in China come apart at the seams, both factors will contribute to North America gaining a foothold on China in this new mining economy.
Still, Bitcoin’s boom and bust cycles leave a sour taste in the mouths of legacy investors who help bankroll these operations; they pour money into infrastructure and machinery only to see their dreams for the digital gold rush be turned (quite literally) into scrap metal.
Perhaps this is the greatest challenge facing the nascent Bitcoin mining industry: how to properly scale and hedge for volatility.
Mining insurance policies don’t currently exist at scale, something Rusinovich pointed out when he spoke to the lack of “collar hedging strategies” (an investment tactic involving options contracts that are meant to limit losses) in the Bitcoin mining market.
One Canadian miner we spoke to, who was wiped out on Black Thursday in March, plans to do just that: The crash caused him to rethink his former day job as an insurance broker. Now he wants to offer insurance policies to complement the hedging strategies Rusinovich discussed.
Until then, miners will have to stick with the playbook they’ve had so far: turning off inefficient miners, planning efficiently well beforehand, and as Samson Mow aptly put it, “believing in Bitcoin.” If North American investors keep believing, perhaps the halving is the beginning of the mining industry’s decoupling from China.
Author: Decrypt / Colin Harper
Bitcoin Breaches $9.2K as Open Positions on CME Futures Hit 10-Month High
Daily chart (CoinDesk BPI)
Bitcoin is quickly gathering upward momentum alongside a surge in open positions on futures listed on the Chicago Mercantile Exchange (CME).
The top cryptocurrency by market value jumped to a high of $9,220 at 10:20 UTC on Wednesday, having settled (UTC) above $9,000 on Tuesday to register its first above-$9,000 daily close in two months.
Meanwhile, open interest – or the number of futures contracts outstanding on the CME – rose to $351 million on Tuesday, the highest level since July 10, 2019, according to the data provided by crypto derivatives research firm Skew.
Open interest hit a bottom of $107 million on March 12, when bitcoin’s price fell by over 40% amid the coronavirus-led crash in the traditional markets. Since then, open positions have risen by 228%.
“The uptick in the CME open interest is indicative of professional traders returning to the bitcoin market,” noted analytics resource Arcane Research in its monthly report. CME open interest is widely considered to be a proxy for institutional activity.
While that may be the case, retail investors, too, could be trading CME futures through TD Ameritrade, an online broker.
Further, the latest open interest figure may have been distorted due to the rumored entry of Renaissance Technologies’ into CME futures trading. In March, the quantitative analysis-heavy firm gave the green light for its Medallion fund to trade the CME’s cash-settled bitcoin futures market.
Some observers argue that only U.S.-regulated institutions are required to trade on the CME while the rest may be trading on other major exchanges like BitMEX.
Put simply, the uptick in the CME open interest does not necessarily represent institutional activity, more so as the exchange accounts for a small portion of the global futures open interest.
“It’s still small relative to the rest of the market and the overall market open interest is still quite low,” said Darius Sit, co-founder and managing director at Singapore-based QCP Capital.
Total open interest in futures listed on major exchanges across the globe stood at over $2.5 billion on Tuesday, the highest level since March 11, when the tally was around $3.8 billion. Meanwhile, CME’s contribution to the global tally was 14%.
Nevertheless, the uptick in both the CME and global volume is likely to bring cheer to bulls as a rise in open interest alongside an upward move in prices is said to confirm an uptrend.
At press time, bitcoin is trading near $9,220, representing a 2.5% gain on the day.
The cryptocurrency has broken out of a six-day-long narrowing price range, signaling a continuation of the price rally from lows near $6,700 observed on April 20. The move strengthens the case for a rise to $10,000 ahead of next Tuesday’s mining reward halving.
Disclosure: The author holds no cryptocurrency at the time of writing.
Author: Bradley Keoun