There is a summer lull in the crypto market, which, however, may just be the calm before the storm. Over the past 24 hours, Bitcoin has lost 7% and is trading around $32.3K. The price dynamic of the first cryptocurrency with seriously reduced trading volumes is considered a worrying sign. After all, if the market is affected by a small number of open positions, then any small storm could turn into a large-scale sell-off, disrupting an avalanche of stop orders.
The current levels near the local lows of the last two months make us watch with bated breath for further movements. The decline of the first cryptocurrency under $30k is likely to trigger a new wave of liquidation. But the most alarming thing for crypto-enthusiasts is that such an outcome will underscore the prolonged nature of the correction, increasing speculation around a new “cryptowinter” like in 2018.
If you try to summarise the number of projects and directions working on this blockchain, there is an understanding that Ethereum may indeed, in the long term, supersede BTC in terms of usage, which will be the foundation of the price. Stablecoins, De-Fi, and NFT tokens are running on the Ethereum blockchain. Since the beginning of 2021, $2.5 billion worth of NFT tokens have been sold.
Visa’s data also looks encouraging, showing that more than $1 billion in transactions have been made through cryptocurrencies since the beginning of 2021. Various companies are increasingly offering cryptocurrency-based products to customers. The ability to peg a cryptocurrency wallet to one of the leading payment processors will significantly increase the use of crypto products.
At this point, big capital may be watching the process of miners moving. After the Chinese authorities banned miners, the hash rate in the blockchain fell by almost 50%, which led to significant changes in both the difficulty of the algorithm and the profits of the remaining online miners. At the moment, they are making income as if Bitcoin is worth about $60K. The miners’ likely choice of location for their work could affect the market outlook. Moving to the U.S. could improve the image of the first cryptocurrency, but there are suspicions that miners fear the U.S. authorities as much as the Chinese. Kazakhstan, Mongolia and other neighbouring countries with cold climates and access to cheap energy could become new locations.
For now, according to Glassnode, the time of calculations of one block has reached the highest value in Bitcoin history. While this could cause problems for the network in the event of high demand, the recalculation of difficulty will correct for any changes in the hash rate. On the other hand, we are now seeing a lucky combination in the market, with some miners stopping mining new coins and spending their savings due to the move, while others are mining significantly more than they are spending.