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Bitcoin vs. Ethereum Rivalry Faces Defining Moment in August: Crypto Analytics Firm IntoTheBlock

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Blockchain analytics firm IntoTheBlock says this month will be a defining moment for Bitcoin and Ethereum with respect to their battle for dominance over the crypto markets. Bitcoin reigns supreme as the world’s leading cryptocurrency in terms of market capitalization at $722.7 billion while Ethereum maintains second place at $292.7 billion.

Analysts at IntoTheBlock suggest that Ethereum’s EIP-1559 update, slated for August 5th, could optimize ETH’s tokenomics to a point where investors start viewing it as more of a store of value.

EIP-1559, part of the London Hard Fork upgrade, features changes to Ethereum’s fee structure including a mechanism that burns or destroys ETH instead of sending it to miners and others on the network as rewards.

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“With the base fee being burnt, higher Ethereum demand can potentially result in lower supply. This in turn disincentivizes spending ETH in the short-term, allowing fees to cool down and supply to increase up to equilibrium. By doing so, EIP-1559 establishes a dynamic monetary policy. Although this may not be as predictable as Bitcoin’s fixed supply schedule, this shift in issuance enables Ether holders to benefit more clearly from demand for the fees it generates.”

According to IntoTheBlock, the new monetary structure that EIP-1559 aims to bring to Ethereum raises the probability of a “flippening”, or an overtaking of Bitcoin’s market cap.

“Being the first step towards decreasing Ether’s inflation, it is feasible to believe that more and more investors will start seeing its potential as a store of value. Ultimately, this would influence the way Ethereum is valued and bring forth higher chances for the flippening.”

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The analytics firm also takes note of the fact that the number of Ethereum holders has surpassed the amount of Bitcoin holders. According to IntoTheBlock, this is a sign of strong network effects on Ethereum, despite Bitcoin leading in terms of “core functionality”.

Source: IntoTheBlock

“As the number of holders of Bitcoin and Ethereum [grows], their networks become more valuable as there are more potential ways for their users to transact or connect with one another. In this end, Ethereum has also managed to surpass Bitcoin… 

This is likely to be the case as Ethereum supports broader use-cases than Bitcoin. Ecosystems around NFTs and DeFi have attracted several users for Ethereum and amplified its network effects. That being said, though, Bitcoin does continue to lead over Ethereum in its core functionality.”

Currently Bitcoin dominance is at 46.6%, down from 72.2% at the start of the year, while ETH dominance is at 18.9%, up from 10.7% in January, according to TradingView.

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Bitcoin extends correction as Ethereum sees ‘picture perfect’ rejection at all-time highs

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Bitcoin (BTC) stayed closer to $60,000 on Oct. 22 after the largest altcoin Ether (ETH) failed to cement new all-time highs.

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BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView

ETH all-time high? Blink and you’ll miss it

Data from Cointelegraph Markets Pro and TradingView ETH/USD just match its record $4,380 on Bitstamp before seeing a harsh rejection.

Traders watched in anticipation as Ethereum appeared to follow Bitcoin to historic new levels, only to face immediate resistance and fall sharply back into a lower range.

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Trader and analyst Rekt Capital called the event a “picture perfect rejection.”

At the time of writing, ETH/USD circled $4,150, preserving $4,000 as support with the exception of a flash dip which immediately followed the all-time high rematch.

ETH

ETH/USD 1-day candle chart (Bitstamp). Source: TradingView

Against Bitcoin, Ethereum fared better, with the ETH/BTC pair having bounced near lows last seen in late July. 

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Bitcoin could see “additional topside euphoria”

Having similarly failed to hold significantly higher levels, Bitcoin itself took an extended break as overheated markets cooled their excitement.

Funding rates were returning to normal on Friday, having reached a state reminiscient of the blow-off top from April. 

Chart

Bitcoin funding rates chart. Source: Bybt

As with open interest, however, these were not as frenzied as the Q2 rush, which produced the $64,900 all-time high in place until this week.

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“This means there is possibly still room for additional topside euphoria but we are at levels that are starting to stretch the market,” crypto trading firm QCP Capital commented in its latest market update.

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Bitcoin Forecast and Analysis BTC/USD October 22, 2021

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BTC/USD are trading at 64619 and continue to move as part of the correction and the bullish channel. Bitcoin cryptocurrency capitalization at the time of the publication of the forecast is $1,194,342,792,891. Moving averages indicate a short-term bullish trend for Bitcoin. Prices went up from the area between the signal lines up, which indicates pressure from buyers of ”Digital Gold” and a potential continuation of the rise in the value of the asset already from the current levels. As part of the cryptocurrency rate forecast for tomorrow, October 22, 2021, we should expect an attempt to develop a decrease in the value of a digital asset and a test of the support level near the 57505 area. Where again should we expect a rebound and an attempt to raise the Bitcoin rate with a target above the 74055 area.

Bitcoin Forecast and Analysis BTC/USD October 22, 2021

An additional signal in favor of the growth of BTC/USD quotes will be a test of the rising trend line on the relative strength index (RSI). The second signal in favor of this option will be a rebound from the lower border of the bullish channel. Cancellation of the growth rate and value of Bitcoin will be a fall in the value of the asset and a breakdown of the area of ​​52205. This will indicate a breakdown of the support area and a continuation of the fall in the Bitcoin rate with a potential target at 42055. Confirmation of the rise in the price of the asset will be a breakdown of the resistance area with the price fixing above the level of 69205.

Bitcoin Forecast and Analysis BTC/USD October 22, 2021

Bitcoin Forecast and Analysis BTC/USD October 22, 2021 suggests an attempt to test the support level near the 57505 area. And further, the cryptocurrency will continue to grow with a potential target at 74055. An additional signal in favor of the Bitcoin rate rise will be a test of the support line on the relative strength index (RSI). Cancellation of the cryptocurrency growth option will be a fall and a breakdown of the 52205 area. This will indicate a continued fall with a potential target below the 42055 area.

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Bitcoin Price Flash Crashes for Second Time in a Month in the US

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The price of bitcoin (BTC) on Binance.US, the US-based exchange affiliated with Binance, briefly crashed to as low as USD 8,200 today – a drop of 87% – before recovering again. The crash marks the second time in a month when bitcoin prices in the US have briefly disconnected from the rest of the world. 

Today’s flash crash, which was one of the most significant on a major exchange in bitcoin’s history, all happened within less than 1 minute, the BTC/USD price chart from Binance.US showed. 

Although the flash crash was all over within a minute, the trading volume showed that a significant number of coins did change hands during the crash, indicating that some traders may have been able to fill orders for bitcoin at extremely low prices.

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BTC/USD on Binance.US. Source: TradingView

Flash crashes can happen when large market sell orders are sent to exchanges without sufficient liquidity on its order books, for instance, because a large trader accidentally placed the order as a market order instead of a limit order.

Today’s flash crash on Binance’s US exchange is the second such incident in a month in the US. On September 20, a data feed for crypto prices called Pyth that is used by some of the largest financial institutions on Wall Street showed a 90% crash in the price of bitcoin.

The feed briefly showed bitcoin at a price of USD 5,402. However, a similar price crash was nowhere else to be seen. Two days later, in a report about the incident, Pyth concluded that the abnormally low price was indeed a technical glitch, “caused by the combination of (1) two different Pyth publishers publishing a near-zero price for BTC/USD and (2) the aggregation logic overweighting these publishers’ contributions.”

Discussing today’s incident on Twitter, many traders complained about being forced by US regulations to use exchanges such as Binance.US, which has thin order books and low liquidity compared to the international version of the exchange.

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No statement has yet been made from Binance or Binance US regarding today’s flash crash.

At 16:11 UTC, BTC trades at USD 63,180 and is down by almost 6% in a day, trimming its weekly gains to 10%.

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