Bitcoin has edged slightly lower today, with prices declining 1% and setting the market up for another potential soft weekend of price action.
It’s been a slow news week, and as such, today’s options expiry has grabbed some attention. Personally, having been excited about some huge expiries in the past, and then witnessed absolutely nothing happen, I’m expecting absolutely nothing to happen.
The other thing with slow news weeks (and slow sideways markets), is the need to dig for a story. We have discussed previously that on-chain activity is lacking upside momentum. Ideally, price rises should equate to increased engagement as Bitcoin spreads to the masses.
We have also pointed out that this rally has been fueled by existing Bitcoiners adding to their portfolios. This leaves me somewhere between, “How high can this go when the next round of participants join?” and, “It's a bit sad that no-one seems to care Bitcoin anymore.” This is crypto: It’s a wide-ranging emotional space.
The rhetoric surrounding BTC has changed since the start of the pandemic: 'Internet money' was replaced with 'Store of value.' And should you be in any doubt that the store of value story has been fully accepted, then please see below…
The number of coins that have been held for 1 year or more that have moved in the last 2 weeks, is now at the same levels we saw in October 2020, when this whole move kicked off.
The miners continued to accumulate Bitcoin, with the miners index persistently below 0, showing their ‘balance sheet’ expansion.
From the last time they moved, the number of Bitcoin sitting with a profit is now 92%.
The hodl story is there for all to see. The hodlers will be hoping the next big story is ‘scarcity’ and that fomo is in the next wave of Bitcoiners, who will inturn, hodl.
This is all great, but let's not forget that Bitcoin isn’t just for the bottom draw, it was also meant to be a means of exchange for everyone, 24/7.
Given the number of transactions on the Bitcoin blockchain is failing to grow, does this mean that, aside from those trading Bitcoin, no one cares?
“In a few decades when the reward gets too small, the transaction fee will become the main compensation for [mining] nodes. I’m sure that in 20 years there will either be very large transaction volume or no volume.”
I’m guessing Satoshi could never have guessed that the Bitcoin movement would see such commitment to holding Bitcoin as a long-term hedge against economic policies.
Thankfully, technology evolves, and with it comes adoption, as things get ‘lightening’ fast and cheaper.
It’s likely a new ATH is driven by FOMO, but sustaining that ATH will be driven by a necessity.
“The root problem with conventional currency is all the trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts. Their massive overhead costs make micropayments impossible.” - Satoshi
On the basis that central bankers, banks and criminals are unlikely to ever change their M.O. I’d say that things are going to work out just fine.
Bitcoin price action remains positive with many supports now seen as congestion for any sell-off. We see the $47,045 demand line, then the 50-day MA at $46,280 and 200-day MA at $45,886. Further support at demand lines and last week’s levels tested of $45,235 and $44,150. Overhead resistance is unchanged at $50,315, the recent high of $52,925, and the FIB resistance between $57,000 and $58,000. Bitcoin needs to break $42,500 or $52,500 on a daily close to really shake things up. Alt coins, NFTs and Defi continue to steal Bitcoin’s thunder. Reportedly USD 1bn of ETH went off exchanges today, previously a precursor to moves higher in price and on ETH pairs.
Bitcoin moved lower to test the $47,045 support in reaction to the USD vs fiat currencies appreciated. This is further reaction and volatility to the heightened awareness and potential contagion of the Evergrande credit event. Support is at $47,045, $45,235, and $44,150, with resistance seen at $49,400, $50315, and $51,775 (X-A-B-C-D pattern).
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It looks like crypto isn’t correlated to traditional markets, at least not during this past session.
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