Monday, 29 August 2022

Market Summary

Market Summary 29 August 2022

Bitcoin Price: US$ 19,555.61 (-2.41%)
Ethereum Price: US$ 1,426.76 (-4.31%) 

 

Bitcoin risks worst August since 2015 as hodlers brace for ‘Septembear’

  • BItcoin (BTC) is on track to see its worst August performance since the 2015 bear market — and next month may be even worse.
  • Data from on-chain analytics resource Coinglass shows that BTC/USD has not had an August this bad for seven years.
  • After two major BTC price comedowns in recent weeks, Bitcoin hodlers are understandably fearful — but historically, September has delivered even worse performance than August.
  • This time around, macro instability is combining with tradition to deliver gloomy projections from analysts.
  • “Equities market in general isn’t looking good right now so this dip on $BTC is a reflection on that,” trader Josh Rager summarized as Bitcoin threatened $20,000 support.
  • “September in general isn’t historically a great month. Possibly dip here that ends up being buyers opportunity for following months. I’ll be a spot buyer for long term on sub $20k.”
  • Rager was continuing a debate over the likelihood of bitcoins from the Mt. Gox rehabilitation process being sold en masse by creditors due to receive them after an eight-year wait. As Cointelegraph reported, many believe that such an event will not occur, with fears to the contrary unsubstantiated.

 

Bitcoin mining difficulty set for 8-month record gains despite BTC price dip

  • The latest on-chain data shows that, far from capitulating, hash rate and difficulty are making snap gains.
  • Despite being down around 7% in a week, BTC/USD is not putting off miners, who have recently exited their own multi-month capitulation phase.
  • Now, with hardware and competition returning to the network, fundamental indicators are firmly in “up only” mode as August draws to a close.
  • This is neatly captured by difficulty — an expression of, among other things, the scale of competition among miners for block subsidies — which is due to increase by an estimated 6.8% next week.
  • According to data from on-chain monitoring resource BTC.com, this will be the highest upward difficulty adjustment since January this year.
  • Not only that, but should the 6.8% increase materialize, difficulty will jump to new all-time highs.
  • “We may see a difficulty jump doozy enough to set a new (or close to new) ATH in a few days,” Bitcoin mining consultancy firm Blocksbridge forecast in the latest edition of its regular newsletter, “Miner Weekly,” released on Aug. 27.
  • Blocksbridge nonetheless noted that the current climate was not easy for all network participants. Those with older equipment, for example, were feeling the squeeze thanks to spot price losses and equivalent drop in value of block subsidies and fees versus costs such as electricity.
  • “Long story short is that the bear market is really crashing those with inefficient mining fleets,” it continued.

 

US stocks lose $1.25T in a day — more than entire crypto market cap

  • Bitcoin (BTC) and altcoins lost big on Aug. 26 after the United States Federal Reserve delivered hawkish remarks on economic policy.
  • Across the board, risk assets took a major hit — U.S. equities shed around $1.25 trillion in a single session.
  • As comments by Fed Chair Jerome Powell suggested that larger rate hikes were still firmly on the table despite recent data hinting that inflation was already slowing, investors rushed to cut risk.
  • “Restoring price stability will likely require maintaining a restrictive policy stance for some time. The historical record cautions strongly against prematurely loosening policy,” Powell said at the annual Jackson Hole Economic Symposium.
  • The S&P 500 closed down 3.4% on the day, hitting its lowest levels since late July. The Nasdaq Composite Index copied the move and extended losses, shedding 4%.
  • Overall, the U.S. stock market lost more value than the entire market cap of Bitcoin and altcoins combined.
  • The total crypto market cap itself fell from $1.029 trillion to $936.87 billion at one point overnight, representing a drop of 8.95%, according to data from Cointelegraph Markets Pro and TradingView.

 

Coinbase says it will ‘evaluate any potential forks’ following the Merge

  • “Should an ETH PoW fork arise following The Merge, this asset will be reviewed with the same rigor as any other asset that is listed on our exchange,” said Coinbase.
  • Cryptocurrency exchange Coinbase has updated its information related to Ethereum transitioning to proof-of-stake to include forks that could arise.
  • In a Thursday update to an Aug. 16 blog post, Coinbase said it would evaluate any potential forks in the Ethereum blockchain on a “case by case basis.” The crypto exchange previously said it planned to ‘briefly pause’ Ether (ETH) and ERC-20 token deposits and withdrawals during the Merge, expected to occur between Sept. 10 and 20.
  • “Should an ETH PoW fork arise following The Merge, this asset will be reviewed with the same rigor as any other asset that is listed on our exchange,” said Coinbase.

 

Binance froze $1M corporate account due to law enforcement request

  • Major crypto exchange Binance has confirmed it restricted account access to $1 million in crypto for a Tezos tool contributor after being called out on social media.
  • In a Thursday Twitter thread, Binance said it had restricted the account of Tezos staking rewards auditor Baking Bad “as the result of a law enforcement request.” The Tezos contributor alleged that the crypto exchange had blocked access to its corporate account containing Bitcoin (BTC), Ether (ETH), Polgyon (MATIC), Tether (USDT) and other tokens since July 1 “without any explanations” — a claim Binance denied.
  • “BakingBad is well aware of [Binance’s actions], as he was already advised of this multiple times and provided the LE contact form through our support chat system on 7/6, 7/12, and 7/22,” said Binance. “Attempting to mislead the community in regards to your case will not change anything, unfortunately.”
  • The exchange added:
  • “Binance is required to cooperate with such requests, the same as any other exchange. There is a process to contest the seizure with the agency should you wish to pursue that path. But that is done through the agency, Binance has zero control over that process.”

 

Hawkish Fed comments and Bitcoin derivatives data point to further BTC downside

  • BTC and stocks sold-off after comments from the Federal Reserve re-emphasized the Fed’s commitment to lowering high inflation in the United States.
  • A $750 pump on Aug. 26 took Bitcoin (BTC) from $21,120 to $21,870 in less than two hours. However, the movement was completely erased after comments from U.S. Federal Reserve Chair Jerome Powell reiterated the bank’s commitment to contain inflation by tightening the economy. Following Powell’s speech, BTC price dropped as low as $20,700. 
  • At Jackson Hole, Powell specifically mentioned that “the historical record cautions strongly against prematurely loosening policy.” Right after those remarks, the U.S. stock market indexes reacted negatively, with the S&P 500 dropping 2.2% within the hour.
  • On the Bitcoin chart, the affable “Bart candle,” a reference to the shape of Bart Simpson’s head, and a descriptor of BTC’s up and down price action, surfaced. Outside of these unpredictable technical analysis indicators, there are other indicators that pointed to Bitcon’s broader neutral-to-bearish sentiment.

 

Celsius bankruptcy proceedings show complexities amid declining hope of recovery

  • Celsius Network’s bankruptcy proceedings have highlighted that the firm has misrepresented many of its assets with deep complexities in its operations.
  • Celsius Network is one of the many crypto lending firms that have been swept up in the wake of the so-called “crypto contagion.” 
  • Rumors of Celsius’ insolvency began circulating in June after the crypto lender was forced to halt withdrawals due to “extreme market conditions” on June 13. It eventually filed for Chapter 11 bankruptcy a month later on July 13.
  • The crypto lending firm showed a balance gap of $1.2 billion in its bankruptcy filing, with most liabilities owed to its users. User deposits made up the majority of liabilities at $4.72 billion, while Celsius’ assets include CEL tokens valued at $600 million, mining assets worth $720 million and $1.75 billion in other crypto assets. The value of the CEL has drawn suspicion from some in the crypto community, however, as the entire market cap for CEL is only $494 million, according to CoinGecko data.
  • Iakov Levin, CEO of centralized and decentralized finance platform Midas, told Cointelegraph that the issue of CEL’ value issue could adversely affect its holders. He explained:
  • “Celsius calculated the CEL token denominated in $1 per token, requiring someone willing to pay this price for the bankrupt token. The situation is dark not only for Celsius users but also for CEL tokenholders. CEL has become a sad example of how some events can cause a domino effect, and the broader digital asset market can suffer as a result.”

 

Still waiting: SEC delays VanEck’s third Bitcoin spot ETF application

  • The United States Securities and Exchange Commission (SEC) has pushed back a decision on the latest application for a Bitcoin (BTC) spot exchange-traded fund (ETF) by global investment firm VanEck.
  • The company has long been trying to get the green light for what will be the first BTC ETF in America, with its first application lodged with the SEC dating back to 2017, which was eventually denied.
  • VanEck saw a second application ruled out in November 2021 by the SEC, reasoning that the firm had not met thestandards to protect investors as well as prevent fraudulent and manipulative acts and practices.
  • VanEck persevered with a third application for a BTC ETF offering in June 2022 filed with the SEC, highlighting a number of reasons why the SEC should reconsider its previous decisions.

 

CME Bitcoin futures see record discount amid ‘very bearish sentiment’

  • Bitcoin (BTC) futures are starting to see record discounts as sentiment among derivatives traders worsens. 
  • In its latest dedicated report issued Aug. 23, analysis firm Arcane Research painted a worrying picture of the morale among BTC futures participants.
  • Futures basis — the difference between futures contract prices and the Bitcoin spot price — is already back at lows seen only during June’s dip to $17,600. The move came thanks to last week’s sudden sell-off on BTC/USD, which resulted in multiple visits below the $21,000 mark.
  • “Overall, the current futures basis sits at levels only experienced briefly during the June crash,” Arcane confirmed, adding that the data is “indicative of a very bearish sentiment among futures traders.”
  • The latest data, which Cointelegraph previously reported, put the GBTC discount — once a premium — at 32.5%. The discount also saw records in June, when it briefly passed 34%.

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