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Even Bitcoin Fundamentals Are Hinting At a Significant Correction Ahead

Bitcoin just had its largest 48-hour pullback since May 2020, back when the asset’s halving took place. The drop in price has the cryptocurrency now trading below a key fundamental level. A deeper dive into other Bitcoin fundamentals may be hinting that a more severe correction that may have only just started. Here’s what the […]

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Bitcoin just had its largest 48-hour pullback since May 2020, back when the asset’s halving took place. The drop in price has the cryptocurrency now trading below a key fundamental level. A deeper dive into other Bitcoin fundamentals may be hinting that a more severe correction that may have only just started.

Here’s what the cryptocurrency’s underlying network metrics are saying about what’s about to come in terms of price action across the crypto market.

Bitcoin Energy Value, Production Costs, and Hash Ribbons Potentially Signal Deep Downside

Technical analysis across any and all assets is exactly the same: open up a chart, check out the candle structure, and look for any patterns or signals. But when it comes to cryptocurrencies, fundamental analysis is dramatically different.

Fundamental analysis is based on two main concepts: qualitative analysis and quantitative analysis. Qualitative analysis comes down more to if you like a coin’s ticker, or if you prefer a Justin Sun against a Vitalik Buterin, for example.

In terms of quantitative analysis, rather than reviewing company revenue reports for tips on stock valuation changes, crypto analysts look at on-chain data and other barometers that measure the health of the underlying blockchain network.

In Bitcoin, this includes how much BTC is held in wallets or on exchanges, metrics like energy value and production costs, hash rate, difficulty, and network-to-transaction ratios.

These fundamentals unique to Bitcoin and crypto make things a bit more tricky, but thanks to contributions from the likes of Willy Woo and Charles Edwards, these metrics have been turned into TA tools.

bitcoin btcusd energy value

BTCUSD Daily Energy Value 2016 - 2020 Comparison | Source: TradingView

By adding these metrics to Bitcoin price charts, it can reveal some compelling signals. The chart above depicting Bitcoin’s energy value shows the first major weekly close below the indicator after quickly poking above it. The last time the cryptocurrency peeked its head above this level then abruptly fell below, was in June 2019, and it signaled a top.

Comparing the past bear market turned bull with whatever is currently going on in crypto, shows a similar initial pump from the bottom that got overheated too soon. The next time Bitcoin went slightly above this metric on weekly timeframes, the cryptocurrency had a 40% post-halving selloff.

This year’s halving came and went, but no death spiral ever arrived. However, energy value is just one signal that is suggesting it could still be coming.

Related Reading | Why Are Bitcoin Miners Moving An “Unusually” Large Amount of BTC?

The cost of producing each BTC is now above the market price the cryptocurrency is trading at. When this happens, miners are better off buying – so instead, they sell.

The post-halving death spiral last time around was due to capitulating miners. Rising fees may have staved this off for some time, but miners have begun moving an “usually” large sum of BTC to exchanges.

The Hash Ribbons have started turning down once again, and when they do, it signals that such a capitulation event is taking place. Past instances of this, line up with the recent Black Thursday bottom, and the 2018 bear market bottom. It also matches the last post-halving death spiral, and it looks a lot like what’s about to happen next.

bitcoin btcusd hash ribbons cost of production

BTCUSD Daily Production Cost & Hash Ribbons 2016 - 2020 Comparison | Source: TradingView

NVT Ratio Demonstrates How Far A Drop In The Cryptocurrency Could Go

Finally, the last fundamental signal in Bitcoin that things aren’t looking so hot in the short-term, is the NVT ratio. NVT stands for network-to-transactions. This ratio compares Bitcoin’s price in relation to the total value being transacted across its network.

NVT recently got hot, similarly to the February 2020 peak, the June 2019 top, right before the drop to Bitcoin’s bottom, and before that when the asset hit $20,000. Now, it is back, and it’s no longer red.

bitcoin btcusd fundamentals nvt

BTCUSD Daily NVT Ratio Past Top Comparisons | Source: TradingView

When prices drop and NVT ratio turns back to black, some type of drop has followed. The furthest back was a 70% collapse from $20,000 to $5800 in February 2018. Bitcoin is currently showing a correlation to that particular bottom when compared to the DXY Dollar Currency Index.

The next time this tool triggered, Bitcoin fell over 50% to $3,200 and met what is hopefully the bottom. Next, was in June 2019, and although it took until December to get there, Bitcoin once again bottomed after a 53% drop.

2020 kickstarted a fast recovery to $10,000, but even quicker the cryptocurrency plummeted 62% to $3,800 on Black Thursday. Now, Bitcoin went back above $12,400 where it may have topped again according to the NVT ratio. But the question is – how deep does this drop go?

Related Reading | This Monthly MACD Bearish Divergence Warns Of Imminent Bitcoin Crash

Taking the four catastrophic collapses, and averaging them out comes to a 58% fall. A dump of that magnitude would take the cryptocurrency back to roughly $5,200. However, given the pandemic, the risk of the coming election, and the aforementioned ominous comparison to the DXY index, there is one more important thing to pay attention to.

According to the NVT ratio, Bitcoin tops out when the indicator turns red. It bottoms when it turns green. The only time the cryptocurrency has turned green since the $20,000 peak was when the crypto asset plunged from $20,000 to $5,800.

Could the latest sighting of red, give us the first glimpse of green before things move up again? And it could it all be due to the comeback of the greenback?

Source: https://www.newsbtc.com/2020/09/04/even-bitcoin-fundamentals-are-hinting-at-a-significant-correction-ahead/?utm_source=rss&utm_medium=rss&utm_campaign=even-bitcoin-fundamentals-are-hinting-at-a-significant-correction-ahead

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CoinShares Launches a $75 Million Physically-Backed Ethereum (ETH) ETP

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A month after launching a Bitcoin ETP on Switzerland’s SIX Exchange, CoinShares has released a physically-backed exchange-traded product following the performance of the second-largest cryptocurrency – Ethereum. 

  • Describing itself as “Europe’s largest digital asset investment house,” CoinShares is a cryptocurrency-oriented manager with over $4 billion in AUM. The company, headquartered in London, announced the launch of its latest crypto product – a new physically-backed ETP tracking the performance of Ethereum. 
  • Called CoinShares Physical Ethereum, the product is already listed on the regulated SIX Swiss Exchange under the ticker ETHE and has a base fee of 1.25%. According to the company, the cost is “lower than the industry standard” of 2%. 
  • The statement explained that each unit of ETHE is backed with 0.03 Ether tokens at launch. Thus, it provides investors with “passive exposure to Ethereum’s native asset with the convenience of an ETP.” 
  • “In the early days of 2021, we have seen a continuation of last year’s demand in digital assets from institutions. We have also seen an increase in investor interest in Ethereum. We are encouraged by our client’s trust in our team to guide them in their journey through the digital asset ecosystem, and for many, Ethereum is an important part of that journey.” – commented Chief Revenue Officer Frank Spiteri. 

  • It’s worth noting that this is the company’s second similar product tracking the performance of a crypto asset launched this year. Somewhat expectedly, the first one, released in mid-January, follows the largest digital asset by market cap – Bitcoin. 
  • CryptoPotato reported upon its launch that it started with AUM of $200 million, and each unit is backed by 0.001 BTC. 
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Source: https://cryptopotato.com/coinshares-launches-a-75-million-physically-backed-ethereum-etp/

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Chainlink Price Analysis: 27 February

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Disclaimer: The findings of the following analysis are the sole opinions of the writer and should not be taken as investment advice

Bearish sentiment has been the norm over the past few days, with the same being the case at press time for altcoins such as Chainlink. LINK has seen its price hike by around 164 percent since the start of the year. Over the last 7 days, however, with sellers dominating the market, LINK lost close to 28 percent of its value. While there have been some signs of recovery on the price charts, traders cannot discount the possibility of a further dip soon.

At the time of writing, LINK was trading at $25.5 with a market cap of close to $10.5 billion, making it the ninth-largest cryptocurrency according to CoinMarketCap’s list.

Chainlink 1-day Chart

Source: LINK/USD, TradingView

Chainlink’s price surged within an ascending channel formation over the last two months and as expected, the breakout was bearish for the coin. Additionally, Bitcoin also fell over the past week, adding to LINK’s price woes.

At press time, while LINK had strong resistance around the $35.1-price range, it was testing the support at $23.9, just like it has over the past few days. If this support level fails, it is quite likely that LINK will head towards the next support at $19, creating an opportunity for traders to open short positions.

Rationale

The technical indicators for LINK were quite bearish at press time and one can expect a further price drop for the coin in the coming days. At the time, the RSI indicator was quite far away from the overbought zone and was close to the oversold zone, indicating the absence of a buyer-dominated market.

If the RSI drops even further, LINK’s downtrend will continue. The MACD indicator also painted a similar picture after having seen the Signal line go past the MACD line, resulting in a bearish crossover.

Important levels to watch out for 

Resistance: $35.1

Support: $23.9, $19

Entry: $24.7

Take Profit: $19.4

Stop Loss: $34.4

Risk/Reward: 0.56

Conclusion

Chainlink saw its price surge on the charts over the past two months. However, the sentiment has since changed quite significantly and the coin seemed to be firmly in the grip of the bears. The altcoin may see a further price drop in the coming week if the press time support level fails. Such a scenario will result in LINK’s price going below the $20-mark, presenting an opportunity for short positions in the market.


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Source: https://ambcrypto.com/chainlink-price-analysis-27-february

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Bitcoin Cash, Huobi Token, Zcash Price Analysis: 27 February

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Bitcoin Cash retained the 10th spot on the crypto-rankings, despite being severely impacted by the recent correction in the broader market. Huobi Token flashed bullish signals, but a break above its press time resistance was unlikely. Finally, Zcash was projected to trade within a fixed channel since volatility was low in the market.

Bitcoin Cash [BCH]

Source: BCH/USD, TradingView

Weekly losses on Bitcoin Cash‘s charts amounted to 34% as a correction in the broader market had a negative effect on the crypto-asset. This period also saw $3 billion erode from BCH’s total value as it held on to the number 10th spot in the crypto-rankings by a bare margin, with a market cap of $9.18 billion. At the time of writing, BCH’s price was floating just above its $464-support, while the indicators gave mixed signals on BCH’s future trajectory.

The RSI pointed lower from under the 40-mark and reflected the weakness in price. On the other hand, the MACD moved above the Signal line while the histogram registered rising bullish momentum. With the crypto-market awaiting strong cues, we can expect BCH to remain above its press time support level. If the aforementioned level fails, the next line of defense would be at $421.5.

Huobi Token [HT]

Source: HT/USD, TradingView

The ADX indicator showed that Huobi Token’s uptrend was weakening after the price snapped an all-time high exactly a week ago. In fact, the losses amounted to over 30% following the broader sell-off in the crypto-market. At the time of writing, the altcoin’s price had bounced back from the $15.4-support after the bulls stepped in.

The MACD closed in on a bullish crossover, while the red bars on the histogram moved towards the half-line on the histogram. Either way, its gains would be capped at the immediate resistance and a hike to record levels seemed unlikely over the coming trading sessions.

Zcash [ZEC]

Source: ZEC/USD, TradingView

The Bollinger Bands on Zcash’s hourly charts were compressed as volatility remained low after the price bounced back from its $114.7-support. Weak trading volumes and buying pressure worked against a bullish outcome even though the price looked to breach the $124.75-resistance.

The Awesome Oscillator switched to red from green as momentum moved back and forth over the last few sessions. Moving forward, expect Zcash to remain within its current channel as it awaits stronger signals from the broader market for a definitive move on the charts.


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Source: https://ambcrypto.com/bitcoin-cash-huobi-token-zcash-price-analysis-27-february

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