Sideways in Jumps

Bert Slagter Schrijver, spreker en analist bij Bitcoin Alpha, Descryptor & Satoshi Radio

12 June 2024

In recent weeks, the bitcoin price has flirted with its record high multiple times. However, the hoped-for breakthrough has not materialized. Instead, the hope for new records has been replaced by doubt over a stalling price. Are there reasons for this? You'll read more about it in this Weekly!

This Weekly in brief:

  • Market: Bitcoin's price dropped by 5% this week to $67,000. Most altcoins performed worse. After this decline, we are exactly in the middle of the price range of the past three months.
  • News: This week brought news from China. The ban on miners appears to be more nuanced, and for a (small) part of the Chinese population, the door to crypto trading is slightly open again!
  • Behind the Scenes: We have a new feature in the Amdax app on iOS. From now on, you will have better insight into your returns with the charts added to Vault and Assets.

Market update

In the past seven days, the price of bitcoin has dropped by 5%, from $71,000 to $67,000. This puts us exactly in the middle of the price range we’ve been in since February 28.

Analyst James Check calls a period where the price moves sideways in a jerky manner to process a previous large increase “chopsolidation.” The price action of the past three months fits this definition. In February and March, the price rose by 90%, and since then, it has been fluctuating sideways between $60,000 and $74,000.

This price range includes both peaks of the 2021 bull market. The first peak was in April 2021 at $64,000, and the second in November at $69,000. Back then, these were short-lived peaks, followed by a sharp drop. This time it’s different. Of the 70 days with a daily close above $65,000, 66 are in 2024.

There’s no precise reason for this decline. One possible explanation is uncertainty about US inflation and interest rates. This afternoon, consumer price figures will be released, and this evening, there will be a press conference about US monetary policy. This could cause some volatility in the coming days. But as long as the price remains within the $60,000 to $74,000 range, there is nothing to worry about in the long term.

01 BTCUSD 2024 06 12 12 12 20

In recent days, we have seen alarmist reports about miner capitulation. With the current price and hash rate, they would be making losses, and in the process of dying, dumping their bitcoin on the market. Let’s see if we can find this in the data.

In the graph below, we have depicted the hash rate of the bitcoin network. We mainly look at the 14-day average, the thick white line, because the raw data is very volatile. We do see a slight decrease of about 10% from the top, while continuation of the trend would have meant an increase of 10%. A visible deviation.

Declines of this magnitude have been seen several times in the past four years. For example, right after the halving in 2020. But also at the end of 2020 (1), in the summer of 2021 after China’s mining ban (2), and twice in 2022 (3) and (4).

The last two occurred in the middle of the bear market. The price had dropped from above $60,000 to around $20,000, and some mining companies had run into problems. After all, a miner’s business model benefits from a low hash rate, high price, and cheap energy. And the first two were exactly wrong.

Is that the case now too? For that, we look at the hashprice, the yield from 1 day of deploying 1 TH/s of computing power. Since the halving, it’s at its lowest point ever, even lower than in the 2022 bear market. This is unfavorable for miners. It’s plausible that some miners are currently making losses with part of their operation.

Does this automatically mean that a capitulation is imminent, with dying miners dumping their bitcoin? No, that’s a hasty conclusion. We also do not (yet) see any indications of this in the on-chain data or from the miners themselves. Many miners are now professional companies that have extensively calculated the impact of the halving and have a good plan in place.

They undoubtedly count on a higher price in the coming years, but it’s unlikely that many mining companies will go bankrupt if the bitcoin price hovers around $60,000 for a few more months!

02 BTC HASHRATE 2024 06 12 12 01 09

News overview

During a period where the bitcoin price moves sideways for an extended time, sentiment can sometimes get restless. The number of digital polemics increases, finfluencers become more extreme in their statements for attention, and developers retreat into their safe building bubble. Perhaps this is a good time to turn our attention to the meditative East.

There, the counterpart of what we call FUD is brewing, not anxious but hopeful uncertainty. Instead of banning crypto, China might cautiously embrace the market.

The first signal comes from climate activist and mining specialist Daniel Batten. On Thursday, he argued that there was never a ban on bitcoin mining in China.

In the summer of 2021, the alleged ban made headlines in major media. It was said to paralyze the industry, with mining hardware being sold for the price of the metals inside. The end of an era.

Batten’s research shows that behind the Chinese intervention was not a total ban, but a recalibration of desired activities within the country’s borders. The result in 2024:

  1. More than 15% of the total computing power still comes from China;
  2. Miners who can contribute to sustainability with 200-500 machines are welcome;
  3. Especially in Inner Mongolia, the ‘Texas’ of China, where much sustainable energy would otherwise be lost.

The second signal came from Bybit. On Wednesday, it was reported that the exchange is preparing to give Chinese people access to its order books. Is the door for millions of Chinese slightly open again?

Yes, but only for a specific target group. Bybit will accept Chinese customers who reside outside China. They may use their Chinese identity papers for verification. How does Bybit check if the customer resides abroad? The exchange does not want to say. But those behind the Great Wall still face a closed door, according to Bybit.

So, no definitive turnaround, but it’s nice to see some optimistic news from China!

Crypto Savings Plan

Invest Periodically and Automatically in Crypto

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Other news:

  • Franklin Templeton predicts a second wave of large ETF investments. According to CEO Jenny Johnson, the current growth mainly comes from consumers putting their money to work. “I think the next influx will consist of larger financial institutions, who are now quietly waiting for the first dust to settle.”
  • BlackRock wants to conquer Wall Street by establishing a new stock exchange. TXSE, short for Texas Stock Exchange, aims to end the regulatory burden and volatility that publicly traded companies in the US suffer. According to the founders, Texas is the ideal terrain for this, also because of the thousands of financially healthy companies located there. In the crypto world, the establishment is linked to BlackRock CEO Larry Fink’s vision that traditional financial products will eventually live as tokens.
  • Telegram’s crypto network is the fastest grower of 2024. Since the beginning of this year, the value locked on The Open Network (TON) has increased 27 times, from $14 million to $386 million. A significant driver was the launch of Open League, Telegram’s growth fund. Also, the decision to share ad revenue with TON holders plays a role. Since the fall of 2023, the messaging app has had a built-in crypto wallet.


The Bitcoin Powered Revolution with Tuur Demeester

The market volatility often overshadows the underlying developments it is based on. Especially with bitcoin, there is a risk of forgetting what the invention is all about. Tuur Demeester can tell this like no other. In Peter McCormack’s What Bitcoin Did, Tuur talks about what he calls a modest revolution: bitcoin as an equalizer.

Behind the Scenes

My Amdax iOS Update: Get Better Insight into Your Returns with Charts

We have added charts to Vault and Assets. This gives you better insight into your portfolio’s performance over the past period. View the performance as a percentage return, or in euro profits and losses.

Curious about your portfolio’s performance? Download the update in the App Store quickly. Are you happy with the update? Help us by leaving a five-star review!

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Bert Slagter Schrijver, spreker en analist bij Bitcoin Alpha, Descryptor & Satoshi Radio

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