Bitcoin (BTC) is circling $35,000 at the start of the week after a fresh dip panics weak hands and fuels a whale feast — what’s next?
After hitting $30,000 in a “capitulation bottom” event, a rebound to $42,000 had many thinking the worst was over for Bitcoin. The weekend proved them wrong.
Cointelegraph takes a look at five things that could help set the trajectory for price action in the coming days.
From weak hands to strong
Throughout the May sell-off, one process has reappeared over and over — new coins flowing to old hands.
In other words, those coins that moved at higher prices near to the $64,500 all-time highs have moved again at much lower prices. Their destination, via exchanges or otherwise, seems to have been large-volume investors (whales) or wallets with little history of selling.
Long-Term Holders are stacking through the dip. pic.twitter.com/0cpKPiaAy8
— Will Clemente (@WClementeIII) May 23, 2021
The phenomenon has been seen before during previous price dips, but the scale of the transfer this time has grabbed analysts’ attention.
It was noticed by PlanB, creator of the stock-to-flow Bitcoin price models, who argued that whales are now taking maximum advantage of new investors’ cold feet.
He uploaded a chart showing at what price every single Bitcoin moved. For April and May 2021, trading habits are clear.
“In the chart you see at what price level each of the total 18.7M BTC was last moved. So what happened in May? Weak hands sold ~1M BTC in May at $30k-35k .. which they bought in April at $55k-60k: a staggering ~$20B loss,” he explained.
“The good news: these 1M bitcoin are in strong hands now.”
This panic selling appeared to be little match even for whales’ own clout. As Cointelegraph reported, large clusters of buy-ins between $50,000 and $60,000 were wiped out with ease as the market fell, this continuing all the way down to $30,000.
“For bitcoin veterans it is indeed unbelievable and embarrassing, but for noobs this volatility can be too much,” PlanB added in separate Twitter comments.
“We all know the kind of people that sold in May, look around you, these are always the same people.”
1-year record fear
With that said, it will come as no surprise that overall market sentiment in crypto — judged by factors tha cover all participants — is extremely cautious.
On Monday, the Crypto Fear & Greed Index is measuring just 10/100, its lowest in over a year and even lower than during the $30,000 test.
Fear & Greed, a crypto-based analog of the same indicator used for the wider economy, uses a basket of factors to determine overall market sentiment at a certain time.
Its implications can be used to decide whether a market is oversold or, conversely, due for a correction at a given level.
On May 12, the Index still measured 68/100, a fairly middling level corresponding to “greed” on the market but still with plenty of room left before a correction could take hold.
The shakeout upended sentiment and therefore the Index, which subsequently fell to its lowest levels since just after the March 2020 cross-asset crash.
“The more fearful, the better the time to buy,” Steve Courtney, CEO and founder of education resource Crypto Crew University, summarized last week.
Courtney speaks for a growing number of longtime punters who argue that it is better simply to buy BTC at lower levels than give in to media narratives that focus only on short-term events.
“I am holding the most $BTC I have ever had by far,” popular trader Scott Melker revealed this weekend.
A record monthly “gyration” for Bitcoin
At the time of writing, BTC/USD is hovering at around $36,600 — 1.5% up versus Sunday but 20% lower than the same time a week ago.
Traders’ patience is being tested. The initial $30,000 episode resulted in a rebound to $42,000, the site of February’s all-time high, but this failed to hold for long.
Instead, Bitcoin dipped back into the $30,000 corridor after mainstream media panic over comments from China over mining and crypto-based commerce. These levels have endured as mainstream consumers are fed with more and more alleged risk factors.
“While you’re concerned with FUD, Bitcoin simply continues to work as intended, securely producing block after block, like clockwork, following a deterministic supply schedule, controlled by no one, unstoppable since more than a decade,” Rafael Schultze-Kraft, co-founder and chief technology officer of analytics service Glassnode, countered on Monday.
“Never lose sight of this amid the noise.”
That “noise” remains especially audible from mainstream publications, among which the phrase “gyrations” to describe volatility has returned as the mot du jour.
Schultze-Kraft’s words, meanwhile, echo the feelings of well-known crypto names, and while super-bullish short-term price forecasts are currently few and far between, there is similarly no doubt about the overall trajectory.
Nonetheless, as Capriole Investments founder Charles Edwards noted, BTC/USD is currently on track to log the biggest monthly red candle in its history.
Stock-to-flow stays intact
Few long-term indicators provide such a calming view of Bitcoin like stock-to-flow.
Throughout the volatility this month, and indeed throughout all periods of volatile price action, stock-to-flow has remained the go-to resource for those seeking proof that it is all “business as usual” for Bitcoin.
As its creator, PlanB, underlined in recent days, this time is no different. Even its correction of more than 50% versus all-time highs did not make Bitcoin violate stock-to-flow’s predictions.
“Actual bitcoin price is at the lower bound of S2F model. Am I worried? No,” he summarized on Sunday alongside data from the model.
PlanB explained that in essence, BTC/USD has room to range approximately 50% around the all-time high in either direction and still conform to expectations.
“It is not OK if we stay at $32K for multiple months, but I expect BTC price to bounce back next days/weeks,” he added.
That would even permit the record monthly downwick and preserve the bull market. As Cointelegraph reported, depending on the stock-to-flow model used, the current four-year halving cycle calls for an average Bitcoin price of at least $100,000. So far, it has never been disproven.
Mining set for a major shake-up
The old adage “price follows hash rate” may need some extra time to prove itself to hopeful bulls.
This week, Bitcoin’s network fundamentals are still making sense of recent events, and their impact on miners appears to be more widespread than initially thought.
According to data from various resources including MiningPoolStats, Bitcoin’s hash rate currently measures 136.7 exahashes per second, around 30 EH/s below all-time highs.
Other estimates put the hash rate more than 10 EH/s higher, but a precise figure is ultimately impossible to attain.
Meanwhile, Bitcoin’s next automated difficulty readjustment, due in six days’ time, will open up mining to more potential hashing power, incentivizing miners to come on board.
This may be sorely needed, as talk has turned to miners selling BTC en masse in recent days.
“I’ve effectively been able to confirm this. Miner selling is a huge driver of price action here. Make of that what you will,” Nic Carter, co-founder of data resource Coin Metrics, said in a series of tweets.
Carter touched on the China narrative and forecast that mining operations would indeed end up being redistributed more evenly — but that this would come with a temporary price.
“Everything I’m seeing indicates an absolutely seismic shift of hashpower out of China and into the world at large,” he continued.
“It won’t be elegant or pretty but obviously it’s great for hashrate distribution (& likely carbon intensity).”
The Cycle Started, Mike Novogratz Says – Bitcoin Boom Is Here; Jack Dorsey Boosts BTC’s Price
Mike Novogratz is one of the essential names in the crypto space which is celebrating the booming price of Bitcoin.
Check out what he had to share with his followers and Twitter fans:
Crypto wealth is approx 50bps of global wealth. That means if you don’t have at least 1/2 percent invested in crypto you are short the global benchmark. Most institutions are still at 0. As they move in, that number will go to 1 then 2 then….
The cycle has started.— Mike Novogratz (@novogratz) October 16, 2021
Someone hopped in the comments section and said this; ‘Anyone who has not yet embarked on the crypto band wagon is a simple minded idiot who knows nothing about markets, freedom or wealth creation.’
Jack Dorsey boosts the price of BTC
It’s been also revealed that Jack Dorse said that Square could build a BTC mining system – this obviously triggered a more massive price race for the king coin.
At the moment of writing this article, BTC is trading in the green and the king coin is priced at $61,118.15.
CNBC online publication just noted that Square CEO Jack Dorsey said late on Friday the company is considering jumping into BTC mining business.
Dorsey tweeted that the company is considering a “bitcoin mining system based on custom silicon and open source for individuals and businesses worldwide.”
Square is considering building a Bitcoin mining system based on custom silicon and open source for individuals and businesses worldwide. If we do this, we’d follow our hardware wallet model: build in the open in collaboration with the community. First some thoughts and questions.— jack⚡️ (@jack) October 15, 2021
Dorsey’s goal would be to make crypto mining more accessible. We suggest that you check out the complete thread that Dorsey shared on his social media account in order to learn all the available details.
Pantera Capital’s Dan Morehead: Bitcoin (BTC) Already Up 100% in This Bull Run
How big is median increase in Bitcoin (BTC) price in bullish market phases?
As Bitcoin (BTC) reclaims $62,000 level, Dan Morehead, CEO of the first-ever cryptocurrency-focused VC firm in the U.S., shares the comprehensive statistics of the last six bull runs for Bitcoin.
Bitcoin (BTC) price doubled in 87 days: Bull Run 2021
According to the latest tweet by Mr. Morehead, the Bitcoin (BTC) price witnessed a 2x increase in the first 87 days of the ongoing bullish wave.
#bitcoin at $61,000 is 2x from where we mark the start of this new bull market in July.
For perspective, the median bull cycle went up 15x over 300 days.
More thoughts on the state of the market here: https://t.co/g46sxp7Qe6 pic.twitter.com/Iy96sJvZzO— Dan Morehead (@dan_pantera) October 15, 2021
Unlike many other experts, Mr. Morehead identifies two separate “bull run” phases in 2020-2021. During the previous one, between March 16, 2020, and April 14, 2021, it took 394 days for Bitcoin (BTC) to increase its price 13x and print a new all-time high.
According to his infographic, the most impressive rally ended with a 106x increase of the orange coin’s price in 2015-2017.
That said, the median Bitcoin (BTC) price bull run lasted for 300 days and increased the “king coin’s price” by 15x.
Will Bitcoin ETF mark the top of the BTC cycle?
At the same time, according to “The Next Price Era” letter issued by Pantera Capital on Oct. 6, 2021, the hotly-anticipated approval of Bitcoin (BTC) ETFs is listed amidst the possible “sell the news” events.
Mr. Morehead noticed that the launch of CME Bitcoin Futures and Coinbase direct listing triggered painful bear markets:
Will someone please remind the day before the bitcoin ETF officially launches? I might want to take some chips off the table.
As covered by U.Today previously, similar statements were made by CNBC’s Jim Cramer.
The seasoned analyst also revealed his plans to “cash out” 50% of his Ethereum (ETH) bags.
Bitcoin Will Significantly Underperform Altcoin Market As New Crypto Price Era Unfolds: Pantera Capital’s Dan Morehead
The founder and chief executive officer of Pantera Capital says that investors can expect altcoins to outperform Bitcoin (BTC) in the long term.
In a recent edition of Pantera’s Blockchain Letter, the head of the digital asset management firm outlines Dan Morehead’s key quotes from the SALT 2021 conference in New York. During the conference, Morehead said that even though his company has greatly profited from BTC, he emphasized that most future crypto gains will come from altcoin investments.ADVERTISEMENT
“My perspective is: Bitcoin has been amazing – Pantera Bitcoin Fund is up 67,000% since inception. However, I think the majority of future gains will be from tokens outside of Bitcoin. I know that sounds heretical to some people here, but that’s my professional opinion.”
Morehead compares the rise of Bitcoin and its competitors to that of the tech industry boom during the late 1990s.
“It’s like saying in 1998 that [the] majority of future tech gains would come from outside Microsoft.
At the time, Microsoft was worth $218 billion, Apple $3.5 billion, Amazon was $2.2 billion. Google and Facebook were zero – they didn’t even exist. In the years since Microsoft did great – it went up 10x. However, 80% of the tech gains in these five stocks came from outside Microsoft.
That’s the view I have here – I think BTC is going to go up a ton – like 10x. It’s a great investment…[but] I think the broader portfolio is going to outperform.”
At time of writing, BTC has a market cap of $1.156 trillion while all altcoins combined have a market cap of $1.327 trillion, according to CoinMarketCap.