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Bitcoin Market Capitalization Has Increased Almost $100 Billion Overnight: What Does It Mean for Crypto Market?

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Does the recent Bitcoin pump mean that the downtrend is over, or is it just another pump before a large drop?

According to CoinMarketCap, platform capitalization of Bitcoin has increased by $100 billion in just one night only. The capitalization increase was followed by 12.5 percent growth at the highest point of the day.

CMC Bitcoin Market Cap
Source: CoinMarketCap.com

Rapid price increase and capitalization growth may have occurred for various reasons, but the most popular assumption is the short squeeze that happened due to the high amount of shorts that bears have opened after a recent $32,000 price drop.

Do the capitalization spike and 12.5 percent price increase mean that the Bitcoin downtrend is over?

If we look closely at the daily Bitcoin chart provided by TradingView, we can clearly see that the price right now is consolidating at the value of $38,700, which matches the strong resistance point—the 200-day moving average (black line on the graph) that is usually used as an ultimate trend indicator.

Bitcoin Daily Chart
Source: TradingView.com

If the price stays above that moving average, it means that it is moving in an uptrend. If the price of the asset goes below that line, traders are usually closing their long positions due to the high possibility of downtrend movement.

Right now, market participants are “thinking” about which way to move Bitcoin. If the price goes above the mentioned line and stays there for a while, Bitcoin’s downtrend movement that began in May will be considered over.

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Additional market stats

Other cryptocurrencies like Ethereum, Cardano and BNB are also moving up with an average price increase of nine percent.

The rapid price increase of Bitcoin has not led to an unexpected dominance increase as usual. At press time, Bitcoin market dominance has been staying around values of 47 percent. But we cannot say the same about the Bitcoin trading volume, which has increased by 76 percent with $35 million in the past 24 hours. The average volume before the recent price increase stayed around $20 million per day.

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South Korean pension fund to invest in Bitcoin ETF: Report

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South Korea’s public pension fund, the Korean Teachers’ Credit Union (KTCU), is reportedly looking to gain exposure to Bitcoin (BTC) via a crypto exchange-traded fund (ETF).

KTCU, one of the largest institutional investors in South Korea, is considering investing in a pure Bitcoin ETF or Bitcoin-linked ETFs in the first half of 2022, local news agency The Korea Economic Daily reported Monday.

According to the report, KTCU is considering investing in several Bitcoin ETF products, including those by South Korean asset management firm Mirae Asset Global Investments. The company launched two ETFs tracking the value of Bitcoin futures via its Canadian subsidiary, Horizons ETFs, in April 2021.

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“As there are some well-made cryptocurrency-linked ETF products by asset managers such as Korea’s Mirae Asset Global Investments, we plan to invest in the ETF products after consultation with domestic asset managers,” an executive at KTCU reportedly said.

The official also mentioned potential investment in a Bitcoin ETF by Mirae Asset’s subsidiary, Global X ETFs, which filed for a Bitcoin ETF with the United States Securities and Exchange Commission in July.

According to the report, KTCU is the second-largest institutional investor in South Korea, with $40.2 billion in assets under management. The pension fund has allocated 40% of its investments in alternative assets, 10% domestic and 9% international stocks. KTCU has yet to determine the size and other details of its potential Bitcoin ETF investment.

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The news comes amid global pension funds getting increasingly interested in gaining exposure to cryptocurrencies like Bitcoin and major companies in the industry. Last week, the Houston Firefighters’ Relief and Retirement Fund reportedly purchased $25 million in Bitcoin and Ether (ETH). Canada’s Ontario Teachers’ Pension Plan Board participated in a $420-million funding round for major crypto exchange FTX, the firm announced on Thursday.

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Elon Musk warns of ‘strong inflationary pressure’ as Tesla mulls Bitcoin payments

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The world faces “strong inflationary pressure” in the short term, and it may persist, warns the world’s richest man.

In a debate about inflation, some of the best-known names in Bitcoin (BTC) voiced unanimous doubts about the state of global monetary policy.

Future of inflation great unknown, says Musk

As even the United States Federal Reserve admits that inflation may be here to stay, the topic has become especially pertinent for Bitcoiners, given the cryptocurrency’s intrinsically deflationary characteristics.

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For Elon Musk, who remains cool when it comes to Bitcoin as a “magic pill” for fiat currency’s ills, inflation is no less of an issue. With over $250 billion in net assets as of this week, potential exposure to devaluating currencies is more of a potential problem than ever.

“I don’t know about long-term, but short-term we are seeing strong inflationary pressure,” he said in a Twitter debate with Ark Invest CEO Cathie Wood and MicroStrategy CEO Michael Saylor.

All were commenting on a previous tweet from Twitter CEO Jack Dorsey, who described inflation as “happening” and apt to “change everything.”

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Wood, also a firm BTC supporter, noted that monetary velocity, on the contrary, had been slowing since the 2008 global financial crisis, disguising some of the devaluation impact.

Regardless, when all types of products are taken into account, the true cost of dollar printing far outstrips government claims about how inconsequential inflation really is.

“Inflation is a vector, and it is clearly evident in an array of products, services, & assets not currently measured by CPI or PCE,” Saylor wrote

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“Bitcoin is the most practical solution for a consumer, investor, or corporation seeking inflation protection over the long term.”

Federal Reserve balance sheet chart. Source: Federal Reserve

Bitcoin may yet return to Tesla

Musk’s Tesla passed $1,000 per share for the first time this week, helping spur a dramatic increase in his net worth.

Related: Tesla hints it may soon resume support for crypto payments

In a filing with the U.S. Securities and Exchange Commission, meanwhile, the company left the door open to accepting Bitcoin for its products in the future.

“During the nine months ended September 30, 2021, we purchased an aggregate of $1.50 billion in bitcoin. In addition, during the three months ended March 31, 2021, we accepted bitcoin as a payment for sales of certain of our products in specified regions, subject to applicable laws, and suspended this practice in May 2021,” the 10-Q document reads.

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“We may in the future restart the practice of transacting in cryptocurrencies (‘digital assets’) for our products and services.”

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Bitcoin bull market ‘2nd leg has started,’ says BTC price model creator

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Bitcoin (BTC) marking a new high of $67,000 last week has opened the possibility of hitting $100,000 by the end of this year.

PlanB, creator of the popular Bitcoin Stock-to-Flow (S2F) model, called Bitcoin’s price retracement from the $60,000-level the “2nd leg” of what appeared like a long-term bull market.

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In doing so, the pseudonymous analyst cited S2F, which anticipates Bitcoin to continue its leg higher and reach $100,000 to $135,000 by the end of the year.

The price projection model insists that Bitcoin’s value will keep on growing until at least $288,000 per token due to the “halving,” an event that takes place every four years and reduces BTC’s issuance rate by half against its 21 million supply cap. 

Bitcoin after the 2012, 2016 and 2020 halving. Source: PlanB

Notably, Bitcoin has undergone three halvings so far: in 2012, 2016 and 2020.

Each event decreased the cryptocurrency’s new supply rate by 50%, which was followed by notable increases in BTC price. For instance, the first two halvings prompted BTC price to rise by over 10,000% and 2,960%, respectively.

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The third halving caused the price to jump from $8,787 to as high as $66,999, a 667.50% increase. So far, S2F has been largely accurate in predicting Bitcoin’s price trajectory, as shown in the chart below, leaving bulls with higher hopes that Bitcoin’s post-halving rally will have its price cross the $100,000 mark.

Bitcoin S2F as of Oct. 26. Source: PlanB

PlanB noted earlier this year that Bitcoin will reach $98,000 by November and $135,000 by December, adding that the only thing that would stop the cryptocurrency from hitting a six-digit value is “a black swan event” that the market has not seen in the last decade.

An 80% crash later

Despite the high price projections, Bitcoin can still see big corrections in the future. PlanB thinks the next crash could wipe at least 80% off Bitcoin’s market capitalization, based on the same S2F model.

Related: COVID-19 vaccine will spark Bitcoin ‘crash’ — Rich Dad Poor Dad author

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“Everybody hopes for the supercycle or the ‘hyperbitcoinization’ to start right now and that we do not have a big crash after next all-time highs,” the analyst told the Unchained podcast, adding.

“As much as I would hope that were true, that we don’t see that crash anymore, I think we will. […] I think we’ll be managed by greed right now and fear later on and see another minus 80% after we top out at a couple hundred thousand dollars.”

BTC/USD daily price chart. Source: TradingView

But not everyone thinks the next correction will be as dramatic as the previous ones. Dan Morehead, CEO of Pantera Capital, said in mid-October that the next Bitcoin price drop will be less than 80%, citing a consistent drop in selling sentiment after each halving cycle.

Last week, Bitcoin established a new record high at around $67,000 following a 53% rally in October so far. But the new highs prompted profit-taking among traders, resulting in retests of the $60,000 support level.

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