Bitcoin whales have started accumulating again and one particular whale that dumped a major share at the near-perfect top was seen buying again. Whales buying and selling is seen as a major market sentiment indicator as these whales often dump on market in anticipation of a price crash and start buying when they believe the market has reached a potential price bottom. Thus, the current buying spree seen among whales could indicate Bitcoin price bottom might be near.
Bitcoin price registered its first red monthly candle in May this bull season, a month that saw the price fall 50% from the all-time high of $64,685. BTC is currently trading just above $36,000, consolidating under 40,000 for nearly three weeks now. The coming month could see a possible trend reversal after breaking the key resistance of 40,000 and whale accumulation could become the possible catalyst.
The first week of May saw the crypto market bleed more than $500 billion of its $2 trillion market cap. While analysts have been predicting a market sell-off of such magnitude for quite some time owing to continuous 5 months long bullish momentum, the correction took many by surprise.
Bitcoin Fundamentals Strong to Carry the Bull Market Further
Every bull market be it from 2017 or 2013 has moved in phases followed by pullbacks and correction. Even during the 2017 bull run, the market has registered 4 major corrections in upward of 40%, thus crypto veterans who have seen previous cycles are confident that the current market correction is not the price top for Bitcoin.
Another reason for the current market sell oft was attributed to high leverage over trading and several FUDs including the Chinese ban on crypto trading and mining hitting the market at the same time. Many new traders fell prey to these FUDs and panic sold their Bitcoin.
Bitcoin price is still down 40% from recent highs, forcing investors to face the reality that the bull run could be over. And while that scare and related selloff certainly shook out even the strongest of hands, those that are still holding could end up reaping enormous profits.
That’s because even though things appear to be extremely bearish at the moment for crypto, the most profitable buy signal in Bitcoin history is about to trigger. Here’s a look at what this means and why the last signal in each bull market is the strongest of them all.
Bitcoin Hash Ribbons Show Miner Capitulation, Buy Signal Is Coming
The first ever cryptocurrency has had its most profitable year on record, tripling in value within the first three months of the year. After a shocking move up, however, the market corrected and it caused chaos in newcomers to the volatile asset class.
More than 50% was bled out of Bitcoin price in just days following the local top – enough downside to question if it was the top of the bull market itself. Several indicators say as such, but the masses deny any chance of that happening – $100,000 BTC or bust.
However, stubborn as they may be, those with so-called diamond hands might end up with profits worth their weight in the precious gemstone.
What The Most Profitable Signal In Crypto Means For The Bull Run
The chart above shows the “hash ribbons” created by crypto fundamental expert Charles Edwards, which currently indicate that BTC miners are capitulating.
During selloffs, miners are forced the sell coins to fund operations. In theory, Edwards’ tool denotes when that’s happening. It also has a very fortunate side effect of being the most profitable buy signal in crypto history.
In the past, the last buy signal of each cycle led to another 8,000% and 3,500% respectively. Each cycle had a number of buy signals before the grand finale, but it is the last signal that gives the indicator its reputation of profitability.
Past buy signals from the current market cycle all have resulted in upside worth bragging about. After the December 2018 Botton, BTC rose by 300% and the most recent signal resulted it more than 500% returns.
With the cryptocurrency already at $35,000 per coin and only now about to trigger this monumental buy signal, how much further could the cryptocurrency climb?
The above chart shows an example of how only another 1,000% is necessary to reach $300,000 per BTC – an ROI which is meager to what the hash ribbons called out ahead of time during past bull rallies.
Bitcoin price was slashed in half during the month of May, leaving today as the last day for bulls to make a stand and undo the worst monthly on record.
Even if the blood stain is left behind on the price chart for good, that doesn’t mean bulls still can’t pull off an upset and push prices higher. Here are five signs that Bitcoin price has bottomed out, or will be soon.
The Signals Showing The Bitcoin Bottom Is Near
Just as extreme bullish sentiment and exuberance around mid-April was the local top of the 2021 rally so far, the current level could also act as the bottom now that sentiment has shift to the polar opposite.
Contrarian investors and traders suggest buying the fear or blood in the streets, but that’s still not the reason to think the bottom is in.
Rather, technicals on nearly all timeframes point to a reversal in the making. The first ever cryptocurrency is forming a bullish divergence (above) while at daily support. The bounce happened once the Relative Strength Index hit oversold levels.
The daily LMACD is also turning upward, showing that bulls are attempting to regain momentum on daily timeframes after a month of mayhem.
Moving up to a higher timeframe, Bitcoin price has also bounced at a rising trendline of RSI support on the three-day chart (below).
But Wait, There’s More Reasons To Be Bullish On BTC
If that’s not enough to believe there’s a low-timeframe reversal in the making, on higher timeframes there’s still many more reasons to be bullish.
The rarely-looked-at two-week timeframe shows that Bitcoin fell to the middle-SMA on the Bollinger Bands. During the last bull market, the line was never lost. In fact, touching it resulted in the finally impulse upward.
The recent push down also caused Bitcoin’s most profitable buy signal to indicate “capitulation” in BTC miners. Past bull markets saw more than 8,000% and 3,500% after the last buy signal appeared per cycle.
Nearly every time the signal appears, more upside is on the way. So why would this time be any different?
With so many signals stacking up, chances that the cryptocurrency is near the bottom are becoming more likely. Drawdowns post buy signal are still common, however, the potential reward has historically always outweighed the risk in terms of ROI versus loss.
Cardano founder Charles Hoskinson says the cryptocurrency industry has “decoupled from bitcoin.”
Alternative blockchains will process billions of transactions worth trillions of dollars, says Hoskinson.
Hoskinson expounded on his vision for a future built on blockchain, calling the result “inevitable.”
In a recent address on YouTube, Hoskinson spoke at length about how cryptocurrencies are starting to develop independent of bitcoin (BTC).
He acknowledged that while the cryptocurrency market as a whole has usually trended with bitcoin, this season is noticeably different.
Hoskinson highlighted seeing “significant counter-cyclic movement” for the first time, adding that bitcoin dominance had fallen to 43%. The Cardano (ADA) founder also emphasized that institutional preference has not been unilaterally for bitcoin. People are even starting to differentiate proof-of-stake from proof-of-work.
Billions of transactions, worth billions of dollars
Hoskinson then continued to speak of the potential of other blockchains, including his own Cardano. Also citing Algorand (ALGO), ETH2 and Omega, he said “we’re all neck and neck for building these amazing engines.” Hoskinson anticipates that these systems will process billions of transactions every year, amounting to trillions of dollars worth of value.
Hoskinson has lofty ambitions for the “financial operating system” he and his counterparts are developing. He says it will be social and institutional, on which eventually Fortune 500 companies and even nation-states will run. “We’re future-proofing programmable finance,” he said, describing these outcomes as inevitable.
Taking back economic identity
Hoskinson then explained that his confidence in this inevitability stemmed from the inadequacies of the legacy financial system. He described it as a “siloed world,” which was “fragmented,” as well as incredibly exclusive, saying essentially “nothing is working.” The current diversity and distribution of crypto markets is a representation of that frustration.
Hoskinson continued to list the ways that blockchain technology will have more impact in the financial world in the next decade than there has been in the past century. Among these developments, he listed monetary policy, construction of financial engineering, movement of wealth through blockchains, as well as automation and innovation in automated law.
Hoskinson expects that the next two billion people to enter the global financial system will do so through cryptocurrencies.
He then explained that this was the reason for his passion for Africa and the developing world. In these environments, crypto use cases can be highlighted better than anywhere else, adding that he found countries in the region to be “open partners.”
Hoskinson concluded by saying that this shouldn’t be exclusive to the developing world, however. “We all deserve economic identity,” he said, which a future financial system built on blockchains will enable us to take back.
On Sunday, May 23, Bitcoin (BTC) and the overall crypto market tanked following China’s crackdown on Bitcoin miners and traders. Well, owing to new regulatory policies, a lot of Chinese miners have considered shifting their base to Europe or North America.
Seeing a major opportunity here, business tycoon Elon Musk has jumped in while recently tweeting that he’s been talking to a lot of miners in North America for tapping into the renewable energy use for Bitcoin mining.
Recently, Elon Musk has been much vocal about the high energy usage associated with Bitcoin mining and transactions. Even Tesla decided to drop Bitcoin payments setting up the crypto market in a frenzy. However, it looks like Musk sees a great opportunity here in the ‘crypto and renewables’ market.
MicroStrategy CEO Michael Saylor took the lead in hosting the meeting between Musk and North American Bitcoin miners. Saylor tweeted:
“Yesterday I was pleased to host a meeting between @elonmusk & the leading Bitcoin miners in North America. The miners have agreed to form the Bitcoin Mining Council to promote energy usage transparency & accelerate sustainability initiatives worldwide”.
Standardizing Energy Reporting for Bitcoin Mining
Since the Bitcoin mining energy consumption is the new heated debate in the market, industry players are putting efforts to bring a solution to it. As Michael Saylor, executives from some of the biggest Bitcoin mining associations joined the meeting with Musk.
This includes big names like Marathon Digital Holdings, Riot Blockchain, Argo Blockchain, Core Scientific, Hive Blockchain, Hut 8 Mining, and others. All these players decided to form an organization to standardize energy reporting associated with crypto mining.
Besides, these players will work together to pursue the industry ESG goals along with making efforts to educate the crypto-mining marketplace.
North American miners have the biggest opportunity hereafter China’s crackdown on Bitcoin miners recently. Will North America become the new dominant player to control a majority of the Bitcoin hashrate?
Cryptocurrency exchange outflows have over the last few days, after the prices of most cryptocurrencies plunged in a market crash that saw the total market capitalization of the space drop from $2.2 trillion to $1.5 trillion. On-chain analyst Willy Woo has pointed out user growth on the network suggests the bull market hasn’t been affected.
Data shared by the analyst revealed user growth on the BTC network has surged as “no-coiners” were taking advantage of the price drop to buy BTC. Per his words, the bull market is “very much intact.”
He added that BTC’s user count has “roughly doubled every year since inception a dozen years ago,” and the peak for this year is expected to “end at levels MUCH higher than the 2017 peak.” This, he implied, suggests the market is “just warming up.”
Seemingly suggesting a recovery is coming, data from blockchain analytics firm Glassnode shows massive bitcoin outflows were seen as prices started dropping and kept on increasing steadily. The shared data seemingly suggests that some HODLers bought the dip, and moved the funds to wallets under their control to hold for a longer period.
The recent cryptocurrency market crash started shortly after Tesla CEO Elon Musk revealed in an announcement that the electric car maker would no longer accept bitcoin payments over environmental concerns.
The market was seemingly over-leveraged, as prices dropped triggered a wave of liquidations that put further pressure on prices. As the market turmoil was unfolding three major payment associations in China – the National Internet Finance Association of China, the China Banking Association, and the Payment and Clearing Association of China – reaffirmed their commitment to upholding regulations from 2017 preventing financial institutions from dealing with cryptoassets.
Over the last seven days, the price of bitcoin plunged from around $45,000 to a $32,000 low before it started recovering. CryptoCompare data shows the flagship cryptocurrency is now trading at $37,600 and is up 11% over the last 24-hour period.
Glassnode’s data shows that the last time exchange outflows for the cryptocurrency surged was in March of last year, when bitcoin’s price plunged by nearly 50% in 24 hours after most major U.S. equity indices entered bear market territory and the World Health Organization declared the COVID-19 breakout a pandemic.
The prices on the Bitcoin chart reflect a struggling Bitcoin, one that has been at the mercy of the decision of a large institution: Tesla. Bitcoin seemed to be gearing up for a retest at $60,000 before the bear market pulled the price back to as low as $35,000 as of yesterday.
Although at press time, Bitcoin is correcting losses, it has done little to convince skeptics that the asset is in a safe zone. While this is the part of the market that is most visible to onlookers and even some market participants, new on-chain data presents us with many reasons why there’s more than meets the eyes.
The panic selling is massive, but long-term Bitcoin holders are committed
Last week, the market recorded liquidations of over $2 billion long positions. This was of course reflected in the 30% drop in Bitcoin’s price. However, a look at on-chain data shows that there’s more to the story than what the charts reflect.
Yes, there is a major market selloff, but these sales are being made by impressionable new entrants who are easily influenced by the FUD. As newbies continue to sell and sustain losses, old hands remain firm, ignoring the bear trend, which they know to be temporary. As Glassnode writes in its weekly on-chain report:
“Newer market entrants have panic sold and realised significant losses on their coins. A total of 1.1M addresses have spent all coins they held during this correction, again providing evidence that panic selling is currently underway.”
Has Bitcoin hit the top?
Tales have it that Bitcoin has reached the top and that the bull run has run its course. But it might be too quick to close the curtains on the bullish cycle as on-chain data yet again reveals why the market, in comparison to historical data, still has a long way to go before the bulls call it a day. Glassnode notes that although last week saw Bitcoin make a sharp correction, it is nothing new when we flip the pages back to 2017.
“The current correction is now over 28% below the $63.6k ATH set on 13-April. This is the deepest correction of the current bull market, however it is consistent with five major pull-backs during the 2017 bull.” — Glassnode.
While the 2017 bull market ran for a full year, the 2021 bull market has only been on for about 200 days, meaning that Bitcoin still potentially has 165 days (which is over 5 more months) to move in green.
It’s been a difficult few days for Bitcoin, the world’s largest cryptocurrency, with BTC falling from the $57,000-level on the 11th to $39,300 at press time.
What precipitated such a correction? Well, the overwhelming factor in everyone’s mind can be summed up by one man – Elon Musk. While DOGE remains his favorite, Bitcoin seems to have lost his favor, with Tesla announcing the suspension of Bitcoin payments recently. Understandably, BTC dropped on the charts on the back of the same. However, Musk wasn’t done yet.
A few days later, the exec seemingly implied that Tesla has sold or might sell all its BTC holdings. While Musk was quick to clarify later that the company has not sold any of its Bitcoin, the damage was already done.
Needless to say, everyone’s mad at Musk. However, what the aforementioned corrections also proved was that while developments like these have a significant short-term impact on the price performance of cryptos, the long-term bull market structure remains intact. This was the finding made by William Clemente III in a recent blog post.
Most commentaries on the impact of Musk’s tweet focused on the price charts and the fact that exchanges saw a sharp hike in inbound transfers (With transfers onto exchanges signaling assumed to be preceding a selling action most of the time). However, that’s surface information. What about the long-term? Has BTC’s bull run finally come to a halt, or will it consolidate before climbing once again?
According to the aforementioned report, it might just be the latter, with some pretty significant on-chain metrics pointing to the same as well.
Consider this – The funding rates, by and large, “haven’t gone negative in aggregate,” despite the fact that they did fall below zero on the likes of Kraken, FTX, and OKEx. According to the analyst,
“Funding rates have gone negative and marked the local bottom of every correction over the last few months.”
While not in the negative zone, press time funding rates do suggest that a bottom might finally be in. Ergo, this might just be an opportunity to buy.
The SOPR is worth looking at as well. At the time of writing, the short-term holder SOPR had fallen deep into the oversold zone, with the same dipping to levels unseen this bull run. What this finding seemed to suggest was that this might be the biggest reset of the entire bull run so far.
The latest corrections also shared a lot of similarities with the corrections back in September 2017. At the time, these corrections were followed by Bitcoin climbing to an ATH of just under $20,000. Hence, there is an argument to be made for the prediction that BTC might only go north from here onwards.
What’s more, according to the analyst, Bitcoin’s weekly RSI is now approaching a key trendline that “served as support and market a reversal for the two largest corrections of the 2017 bull run.” Last week’s price candle was also found to be sitting close to the cryptocurrency’s 21-week moving average, a level that has long served as support. Therefore, a reversal can be expected soon as well.
So yes, Bitcoin’s bull market remains intact and no, this isn’t going to be the 90% price crash some expected it to be. Did Musk’s tweets have an impact? Yes. But, the fact that it did shouldn’t even come as a surprise. After all, Bitcoin and the larger cryptocurrency market were happy to move north on the back of the Tesla CEO’s positive tweets. It’s only fair that BTC would move in the opposite direction on the back of adversarial news too.
Bitcoin isn’t and should not be an instrument of Elon Musk’s shitposting tirades. And the fact that despite its long-term strength Bitcoin’s short-term movement was dictated by the whims of one man is “embarrassing.”
Arca’s Jeff Dorman put it best when he claimed that the bulk of the media had a choice to make – “to stick with the tried and true narrative of the past 10+ years, or to make a quick buck off of Elon Musk – they chose the latter, and these actions have consequences.”
The Cryptoverse insiders have tried to identify several causes for the latest bitcoin (BTC) fall that dragged the whole market down and it seems that history and arguments were once again repeating – many were bearish short-term and bullish long-term. (Updated at 16:53 UTC with the latest market data.)
And then, BTC crashed to almost USD 30,000, before recovering. At 13:48 UTC, BTC trades at USD 35,079 and is down by 22% in a day. Other coins from the top 10 list are down 27%-40%.
Earlier today, BTC dropped below USD 40,000 for the first time since February, and Crypto analytics firm Coin Metrics found it “inevitable” even before this happened. While BTC veterans appear to be “weathering the storm and continuing to hold for the long-term,” given the major upgrades coming this year, the analysts at Coin Metrics gave two reasons for the current drop.
First is Elon Musk’s changing positions on BTC and him moving back to dogecoin (DOGE), combined with Tesla removing BTC as a payment option, and their reason exasperating the Bitcoin energy consumption debate.
The second is the cyclical nature of crypto markets. “Despite the knee-jerk reaction to Musk’s Tweets, BTC’s recent downturn appears to be part of a larger trend. Crypto markets tend to be cyclical and move from periods of BTC domination to periods where smaller-cap assets reign supreme.”
And currently, we seem to be in an altcoin cycle, a big part of which is ethereum (ETH)’s surge and it outperforming BTC. Also, what the cycle led is the rise of “Ethereum competitors”, including ethereum classic (ETC), which resulted in BTC’s dominance dropping, as well as trading volume for smaller-cap assets surging.
Commenters online reiterated what had been reported earlier – that people seem to be rotating out of BTC into ETH.
Also, one more reason for the drop is once again repeating crypto ban FUD from China.
“This is the latest chapter of China tightening the noose around crypto,” Antoni Trenchev, Co-founder of crypto lender Nexo, told Bloomberg TV.
Then Matt Maley, Chief Market Strategist for Miller Tabak + Co, pointed to another potential cause that may have helped the price drop – Bank of America (BofA) fund manager survey showing that “Long Bitcoin” is the most crowded trade currently in the world.
“When an asset becomes the most crowded trade in the BofA survey, it has frequently signaled a near-term pullback in the past,” Maley told Bloomberg. “When you combine this with the news out of China, it’s not a surprise that Bitcoin is seeing some more weakness.”
And then there’s a full circle made, back to Musk, as his presence in the space may have actually damaged cryptos’ reputation, suggested David Bianco, Chief Investment Officer of the Americas at DWS Group. “I don’t think his comments are contributing to making [bitcoin] a more serious asset class. People look at it and think to themselves, this is just too much of a fad, it has too much popular culture attention,” he told Bloomberg. “Professional investors don’t want to hear about investments being talked about on Saturday Night Live.”
Many say that the price recovery will be slow, that a bear is imminent short-term, but that we’re in for a bull run after that.
Following China’s move and other developments, “Bitcoin investors are now in a state of fear, a situation that may influence further price drops,” Greg Waisman, co-founder of payment network Mercuryo, told Cryptonews.com. “Bitcoin’s recovery is, however, dependent on the coordinated effort by both retail and institutional investors to defy the market trend and load up on the coin. This recovery can occur at anytime as resistance is bound at this time.”
Waisman said that this drop is significant for the crypto space as most altcoins respond in tandem with the BTC price movement. “A continued fall without cushion may signal a broader entry into a bear market,” he added.
Per Coin Metrics, BTC spent output profit ratio (SOPR) dropped below 1 on May 15 to its lowest level since February 27, signalling that investors are selling at a loss. “This suggests that some investors who bought recently, while BTC price was near all-time highs, have capitulated and are selling their holdings.”
However, though not always accurate, a SOPR of below 1 has corresponded with local cycle bottoms. And this is not the only sign that “bullish sentiment has reset and that the local market cycle is nearing a bottom” – BTC perpetual futures average funding rates have come in closer to zero, at times even dipping negative.
Per Joe DiPasquale, CEO of crypto fund manager BitBull Capital, “bitcoin’s pattern over the last 10 years has been meteoric rises followed by pull-backs.” The trends has been higher highs and higher lows, he told Cryptonews.com, noting that, while it fell from its USD 63,000 high, it still saw a strong rise in the past 12 months.
Bitcoin mining only uses half the energy that the traditional banking system does, a new study claims.
Gold mining also uses up to twice the amount of energy of the bitcoin version, says the report, which was published by cryptocurrency investment firm Galaxy Digital.
The white paper study from the Galaxy Digital Mining team comes after Elon Musk fueled a debate on the energy consumption of bitcoin mining and announced that Tesla would no longer take it as payment for its electric vehicles.
Billionaire former hedge-fund manager Mike Novogratz is the CEO of Galaxy Digital, which made public all of its calculations.
The authors of the study estimate the energy consumption of the entire bitcoin network at 113.89 terawatts per hour, of which 99 per cent comes from the mining computers.
Bitcoin mining is the process of solving complex mathematical puzzles to verify bitcoin transactions and record them in the blockchain ledger.
This figure is lower than the University of Cambridge’s Centre for Alternative Finance, which estimated it at 128 terawatts per hour in March 2021.
The CAF has estimated that the bitcoin industry as a whole now uses as much energy each year as a country the size of Malaysia.
The Galaxy Digital study claims that, by their calculations, bitcoin’s energy consumption is less than half that of the traditional banking system, which it estimates at 263.72 terawatts per hour, and gold mining’s 240.61 terawatts per hour.
The study admitted that “gauging the energy use of these two industries is not as easy as auditing bitcoin” and stated that their study was a “good faith effort to estimate the energy footprint of both the gold industry and banking system.”
The study stated that “the banking industry does not directly report electricity consumption data.”
And it says it made its banking calculation based on Galaxy’s estimations of power usage by banking data centers, bank branches, ATMs and card networks’ data centers.
To calculate the energy consumption of the gold industry, Galaxy Digital Mining says it used estimates for the industry’s total greenhouse gases emissions provided in the World Gold Council’s report titled “Gold and climate change: Current and future impacts.”
Social media critics were quick to point out that both the gold mining and banking industries are both significantly larger than bitcoin, yet only use twice as much energy according to the study.
Galaxy Digital responded to that criticism by saying that bitcoin’s energy consumption was not linked to its “transactional volume or throughput.”