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More Bitcoin whales after halving

Bitcoin underwent its very famous halving on 11 May 2020, which meant that the reward for mining Bitcoin has been reduced by 50%. The reward for mining before 11 May was 12.5 BTC, while the amount after the halving was 6.25 BTC. That is a massive salary cut for the miners out there. Most analysts and investors following Bitcoin has expected a price rally for Bitcoin after its halving, however, that is not yet happened. Even though the price has not yet skyrocketed since 11 May 2020, investors have not yet left the cryptocurrency.  

Looking back at the year 2020, we saw Bitcoin as low as $3,867 seen in March. That is luckily lower than today. As the months have gone by, we are back up at the magic limit of $10,000. The market seems so have created a barrier at $10,000, which will take some effort to get through. In the cryptocurrency world, it is interesting to pay attention to large investors. What large investors do often say something about where people with influence and more money want the market to go. Large investors, also called whales, are continuing to buy Bitcoins. 

Yesterday, the number of whales owning more than 1,000 Bitcoin were 1,840. The number of whales increased from pre-halving levels at 1,811, up nearly 2% according to the blockchain analytics firm Glassnode. The last time that many whales were in Bitcoin at the same time was back in November 2017. This increase in whales over time, and continues growth, indicates that investors are confident and expecting a price increase. Pretty much all analysts we have spoken to are bullish on Bitcoin over the next 12 months. Bloomberg analysts, as covered some time back, are expecting to see Bitcoin prices of $20,000 by the end of 2020 due to this increase in whales on the market. 

The next step for Bitcoin

An interesting take on the increase in numbers of investors on the market, is the likelihood of breaking through the $10,000 barricade. It is important, obviously, to get through this obstacle as it will give the market a psychological boost. “We are bullish in the medium term with a target of $12,000”, said Matthew Dibb, co-founder of Stack, a provider of cryptocurrency trackers and index funds. He thinks the move to $12,000 would be preceded by a few weeks of erratic trading. If you are trading Bitcoin or invested in Bitcoin, it is important to pay attention to the new economic data coming out of the US. In addition to braking a psychological barrier, an increase in price will also draw more return-driven investors. If you want a return, you need, in today’s market to take a higher risk as the typical safe heavens with a couple of present as payment for risk minimization is gone. 

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Fed’s Statement brings Bitcoin close to $10,000

The Federal Reserve (Fed) gave a statement today, June 10th, 2020, that the interest rate would continue to stay close to zero until the end of 2022. The US Central Bank predicted that it will take years to get the job numbers down to the same levels as it was pre-corona virus. The Fed sees the US economy contracting by 6,5% and unemployment coming down to 9,3% in the near future. 

The Bitcoin prices started to rise right after the Fed’s statement. In the last couple of hours, the Bitcoin prices have been fluctuating close to $10,000. The prices have still not broken through the key marker $10,000, which is considered a major psychological level for the currency. Bitcoin, the world’s largest by market value, reached $9,979.72 earlier in the day before quickly retreating to some hundred dollars lower in a couple of minutes. There is no surprise that the currency is retreating as investments and speculations in cryptocurrency are very risky. Bitcoin went up after the Fed’s statement, but it is still uncertain whether the Fed brought the currency up or whether other factors gave Bitcoin prices a bump. 

If we look at some of today’s quotes from different analysts, Marouane Garçon, managing director of crypto-to-crypto derivatives platform Amulet, said “I think the Fed announcement is great news for Bitcoin, but it doesn’t move the needle.” Joe DiPasquale, CEO of cryptocurrency hedge fund manager BitBull Capital, agreed in his statement that about today’s flirt at $10,000 as being “unrelated to the Fed announcement.” As we keep listening to well-known players in the field say about today’s news, Kiana Danial, CEO of Invest Diva, gave an exciting take on the Fed’s statement: “today’s volatility may have been derived from the USD selloff after the Fed statement.”  “Since Bitcoin is traded versus the USD, a weak US dollar will push the BTC/USD higher,” she noted.  She further pointed out that “if the USD sell-off continues, the Bitcoin bulls may finally find enough sentiment to break above the $10K resistance.” 

It is important to keep in mind Danial’s other statements where she points out that buyers have failed to surpass the $10,000 level convincingly over the last several months, in spite of making several attempts. Have a look at our piece from yesterday where we look at the three last attempts of braking through $10,000 without any luck. DiPasquale had a great take on the situation: “If the price remains in the same pattern, it is likely that we will see a break above $10,000 soon, with $10,200 serving as a short-term resistance. On the downside, $9,500 is acting as a reliable support.”  Let’s get ready and pay attention to where Bitcoin will go next. Just remember to only invest money that you can afford to lose, as nothing is certain in cryptocurrency investments and trading. 

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Bloomberg Bull on Bitcoin

The cryptocurrency market is never quiet. When things seem quiet, there is always something going on. After a couple of quite days in the aftermath of the halving, Bloomberg senior commodity strategist Mike McGlone released yet another report where he takes a very bullish stand on where the Bitcoin price is going. McGlone predicts the price to go up and to double before the year ends. 

Looking at the current Bitcoin price, we can see a consolidation just below $10,000. Look at our previous piece on how the Bitcoin price us floating between $8,800 and about $10,500 where a stronger barrier exists. 

The McGlone report is titled “Something Needs To Go Very Wrong For Bitcoin Not To Appreciate.” As a Wall Street Bitcoin bull, McGlone released his 7-page document showing exactly why the Bitcoin price should rocket up. It has later been released on Bloomberg. We advise everybody with an interest in Bitcoin and Bitcoin trading to read the document. If can be found on this link.

The document looks at historical movement and has some really nice graphs to show his points. The analyses is broad based, which is obvious taking into account the sub-heading “History indicates BTC toward USD 20,000 in 2020.” McGlone looks at technical and fundamental factors in another section with the titled, “A Consolidating Bitcoin Bull.” This section looks at gold and how BTC can be a better choice than gold in the bigger picture. McGlone relates this argument to the Carter-era gold price movement and points to technical support in the range of USD 9,000. He cites some market microstructure improvements in a section, “On-Exchange Absorbing Supply.” It is a great read if you want to learn a bit more about how analysts think when it comes to Bitcoin. 

The report issued by the famous McGlone is an impressive piece of work. He really digs into the material and understands very well the basics and the fundamentals of Bitcoin specifically and cryptocurrency generally. If you are interested in reading more about Bitcoin, there are many places to read. We recommend starting right here. That said, Bloomberg has generally been inclusive towards crypto in the last years. Many people do not have access to the Bloomberg terminals, but many pieces get releases on their web page quickly or after some time. The company has also launched webpages dedicated to crypto which are often the gateway for mainstream access to stories in the space. So, do not discard Bloomberg as a provider of some interesting news. We, however, keep our finger on the pulse. If something comes up, we will report it here. 

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Pay attention to the Bitcoin $8,100 and $10,000 price point

Bitcoin has received a lot of attention after the recent halving. The question on everybody’s mind is whether the halving will push the price of Bitcoin up. We have seen a rise in price since then. Bitcoin is currently trading at about $9,600. We are all hoping to see Bitcoin close over $10,500, which we have not seen since August 2019. 

If we take a look at the weekly chart for Bitcoin, and look at BTC/USD, we see that Bitcoin has been trying to push through the $10,000 hurdle three times already. This week’s peak was the third attempt to push through $10,000. 

The weekly Bitcoin chart shows BTC/USD at the peak of its third attempt to push the price through $10,000 without luck. It has been about 10 months since last time Bitcoin settled above $10,500. 

If we look at the market’s most interesting trading prices, we find the majority of trading happening below $9,700. This has been the case since 2019. We have seen very little volume traded above $9,700, which shows that peak trading interest is about today’s prices. If we would experience a break through today’s price we would suddenly see a whole new trading pattern, which would result in volatility. This means that Bitcoin trading below $9,700 does not mean that the price would drop significantly. The purchase charts show a strong purchase block on $8,800 and $8,000. If we would see a sudden drop in the price of Bitcoin, the purchase charts now show that a significant number of buyers are ready and willing to stop that drop at these two levels. 

Therefore, there seems to be a clear indication where of the current window is. To safeguard the indications, we are really looking at $8,100 and $10,500 as the space to wiggle in. However, the state of Bitcoin remains in a state of being bullish at resistance. Except for technical indicators, many market drivers are pushing for a higher price. That said, the only way the Bitcoin price can continue to move upwards is to break through the $10,500 obstacle. If that breaks, the river will not completely flood the valley as the next target appears to be around $12,000. 

Are you following the Bitcoin price? Stay tuned for more updates and news about Bitcoin and what is going on today right here at Coinmarket. Our researchers and writers are plugged into the biggest changes that happen on a daily basis to keep updating you on their take in these recent changes and events. 

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The Covid-19 Economy: Real Estate

2020 has upended economies worldwide thanks to the cataclysmic coronavirus crisis, which has necessitated the shutdown of entire economies as nations struggle with illness, death, and containment. No nation has seen greater infections or greater casualties than the United States, which has demonstrated a haphazard approach of both shutdowns and potentially premature reopenings, piecemeal among the fifty states, as the federal government struggles to both formulate a coherent approach while muddling through the politics of a presidential election year. Throughout the spring, historically dependable investments have proven shaky while more innovative investments such as Bitcoin have steadfastly outperformed even tried-and-true gold. The recession into which the US appears to be sliding (as is the EU and many economic zones the world over), bears some resemblance to the 2008 Financial Crisis, but is predicted to prove potentially worse. That crisis predated Bitcoin and may have been the catalyst for it, while this one may cement cryptocurrency into the minds of younger investors as a smarter investment and institution than those that prior generations clung to. As in the 2008 crisis, the US real estate market is in the midst of a nosedive. 

The lockdowns in the US have resulted in appalling unemployment numbers, which have begun to affect the real estate market. Home sales are at a nine-year low and staggering numbers of homeowners are defaulting on their mortgages, while renters are unable to pay the rent that may translate into mortgage payments by landlords. Existing home sales plunged 17.8% in April, according to the National Association of Realtors, a percentage decline outpacing any since July 2010. That month was in the midst of the subprime mortgage crisis, upon the expiration of the homebuyer tax credit. Not only did some homeowners change their minds on listing properties for sale, but some already on the market were pulled in favor of more promising days, resulting in a 19.7% inventory figure fall annually in April, to 1.47 million units. This trend has pushed the median price of existing homes sold in April to $286,800, and while the 7.4% rise from a year earlier may appear promising, such appreciation is not healthy for the overall housing market. The only way for it to balance out is for listings to grow dramatically, as well as for new home construction to blossom. However, housing starts plummeted by 30.2% in April and permits for future homes dropped 20.8%.

Predictably, the ballooning unemployment numbers have driven many homeowners to default on their mortgage payments, and a timely report by the UK-based economic forecasting firm Oxford Economics predicts that approximately 15% of property owners will fall behind due to the coronavirus, outpacing the delinquency rate of the Great Recession, which hit 10%. The national delinquency rate jumped from 3.06% in March to 6.45% in April, the largest single-month jump in history and three times the prior single-month record set in 2008. According to The Washington Post, during the Great Recession, it took 18 months before such an enormous single-month surge. Data from the Mortgage Bankers Association demonstrates that over 4.1 million homeowners, amounting to 8.16% of all mortgage-holders in the US, are in forbearance. This inevitably results in stricter borrowing requirements, with announcements of more stringent underwriting requirements and the discontinuation of some lending products entirely. 

The question for cryptocurrency is, will investors dump their coins and cash out, scrambling to cover rent or mortgages are unemployment figures worsen? Or alternatively, will this drive more investors who may have eyed real estate toward cryptocurrency as a more dependable investment in the new Covid-19 economy? 

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Bitcoin and the Covid-19 Economy

Since the beginning of 2020, the world economy has been upended by the spread of the coronavirus and the lockdowns and quarantines that have ensued in an effort toward containment. Further, typically lucrative assets such as oil have plummeted due to the sharp decrease in demand that responses to the coronavirus have also wrought. Bitcoin was born in 2009 partly as a response to the 2008 financial crisis, rapid devaluations, and runaway government spending and money-printing that took the helm in economic abatement efforts. How is this currency crisis affecting Bitcoin eleven years after its birth?

The Tokenist, a market research organization, put out a report exploring this subject, titled “Comparing Public Bitcoin Adoption Rates in 2020 vs 2017.” The report demonstrates that with this Covid-19 reality settling in for the long haul, trust in Bitcoin has ballooned 29% over the last three years, as trust in traditional banks and financial institutions continues to dry up. Considering the current state of traditional safe-bet investments and the incredible fallout of the real estate market during the 2008 financial crisis, it is no surprise that The Tokenist found that trust is growing in Bitcoin over investments like gold, stock, and real estate. The data that this report gathered came from a survey of 5,421 participants in 24 countries, taken in April 2020, as well as several surveys from 2017. While faith in traditional financial institutions and assets have been waning over the last decade anyway, Covid-19 has accelerated the trend. 

Further, The Tokenist found that 47% of the recent poll’s respondents actually feel more positively toward BTC as a long term store of value than they do big banks, and 45% preferred Bitcoin over stocks, real estate, and gold. Interestingly, 61% of all respondents and notably, 78% of millennials are familiar with BTC. It appears that the intangible nature of BTC is no deterrent to millennials, who feel by 59% that most people will have adopted Bitcoin within the next decade. 

It looks like Bitcoin is here to stay, and to the generation that will soon be most responsible for not only innovation but also the amassing of wealth and creation of longterm savings, it is a staple whose value and relevance is beyond doubt. 

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Bitcoin News from Venezuela

A few weeks ago, we discussed the coder who sought to develop a state cryptocurrency for Venezuela, and his showdown with the dictator, Maduro. Cryptocurrency in general and Bitcoin specifically has quite a stronghold in what is thought of as the less-developed world, for it is often far more stable than local currencies. This is certainly the case in Venezuela, where individuals can now use Bitcoin to pay for an array of goods and services at over 20,000 point-of-sale (PoS) terminals. Some of Venezuela’s most prevalent retailers were hooked into Bitcoin through a deal between Cryptobuyer, a Panamanian crypto exchange, and Mega Soft, a local payment processor. Using Mega Soft’s Merchant Server platform, these retailers will now process payments in BTC, finance coin, day, dash, ether, tether, and XPT, which is Cryptobuyer’s native token. This covers quite a bit of retail traffic, as Mega Soft processes approximately 18 million transactions per month in Venezuela alone. Once this deal goes live (in all likelihood, in June), after payment is made in cryptocurrency, merchants can either convert the funds into fiat or hold on to crypto in their digital asset accounts with Cryptobuyer’s exchange. Bigger names such as Samsung, Burger King, and Traki Stores have already been accepting cryptocurrency payments through Cryptobuyer in Venezuela, but other large business to have now signed on include pharmaceutical group Farmatodo, the supermarket chain Central Madeirense, EPA Hardware, Plawa’s Automercados, a movie theater, and a number of other retailers. In the two years that Traki has accepted crypto payments, it has handled a little over one thousand of them. 

Cryptobuyer CEO Jorge Farias has expressed hopes to integrate around 100,000 merchants in wider South America and Europe by the end of 2020. With the economic upheaval and instability of many currencies due to the worldwide coronavirus crisis, cryptocurrency is seen as becoming even more widely relied upon and accepted. As it gains popularity among various state of populations, merchant can only benefit from accepting more diverse forms of payment. 

In its seventh year of economic contraction, Venezuela has a rate of inflation right under 3,000% just this year, which has rendered the Bolivar effectively useless. Though the Petro, its state cryptocurrency was a supposed answer to Venezuela’s woes, it was sanctioned by the US immediately and US citizens were banned from transacting in it. 

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Bitcoin Miners Following the Halving

While many investors in Bitcoin have eagerly anticipated the Halving, hoping for a steep rise in the value of the coins they hold, to Bitcoin miners, the Halving is also a halving of a paycheck, as reward for mining have also been cut by 50%. This is the case with every Halving, and this recent one having been the third such event in the decade-plus history of Bitcoin, the rewards for Bitcoin were far larger in 2009 than they are now. However, halvings and the reduction in rewards, while alarming to those who worry about the motivation behind mining, which ultimately maintains Bitcoin’s security architecture, are a perfunctory aspect of Bitcoin’s monetary policy. Bitcoin arose in 2009 out of the ashes of the 2008 global financial crisis, when bailouts and runaway money printing were de rigeur, and some say only masked the socio-economic issues underpinning the crisis rather than solving them. Bitcoin stands apart from such artificial economic infusions in that its monetary policy stands as is, and will not be changed to ultimately guarantee the currency’s survival. 

With the economic upheaval of the coronavirus affecting virtually every economy, not unlike the 2008 financial crisis, this is quite an unfortunate moment to have one’s payout halved as is the case for miners. In fact, because the business of mining was already cost-prohibitive to most individuals and is even more so following the Halving, about one third of Bitcoin mining firms may already be closing up shop and shutting down their machines. Following the Halving this week, the reward for solving the mathematic puzzles that underpin the network was reduced to 6.25BTC per block. Since generally miners work in pools, those are often split profits for an effort that takes a great deal of pricy machinery and electricity. According to Alejandro De La Torre, the VP of Poolin, a mining pool, anywhere from 15 to 30% of the whole BTC network hash rate is already shutting down due to squeezed profits. There are of course differences in the electrical costs of “old generation” mining rigs, for instance Bitmain’s S9, and newer ones, so those mining pools reliant on less efficient equipment will be most affected. 

Perhaps the revenue decline in mining will be counterbalanced by a spike in BTC, but ultimately mining is a long game of survival. If ultimately this translates into a survival of the fittest, most efficient miners, with cheapest electricity, then perhaps it is a matter of the evolution of Bitcoin. The mining reward has fallen from 50 in 2009, to 25 in 2012, to 12.5 in 2016, and then ultimately to 6.25 this month (all in BTC). 

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Bitcoin Amid the Coronavirus and the Halving

It has been quite a remarkable few months for the world economy, as well as for bitcoin. The coronavirus has rocked economies throughout each continent in previously unforeseeable ways, and the extent of the fallout has yet to be seen as many countries remain under lockdown while some hesitantly flirt with reopening. Bitcoin inevitably has been affected by the coronavirus as well. On the one hand, even the most stable currencies throughout the world have fluctuated recently, especially as influential commodities such as oil have fallen drastically in value. Even the most reliable traditional assets like gold have not looked promising in recent months. While bitcoin has proven more stable amid the coronavirus crisis than many national currencies, assets, and commodities, the conditions for innumerable bitcoin investors, dabblers, and miners have changed. For those who depended on other forms of income to get by, those sources may have dried up amid lockdowns, necessitating the selloff of bitcoins to be used for substance such as food and rent payments. Still others may have cut down on bitcoin mining due to its prohibitive expense. 

To add to the unforeseen coronavirus crisis, bitcoin has seen the Halving, cryptocurrency’s most anticipated event of 2020, on Wednesday May 13th. Anticipated with excitement by investors, they have hung their hopes upon the increased value of each coin, assuming the demand for coins would stay the same while the rate of supply would be cut in half. However, for bitcoin miners, the Halving was essentially a paycheck cut in half, at a time when many have already lost their local currency paychecks due to the coronavirus crisis. The reward for mining coins has also been reduced by half, undercutting the motivation of many to mine. 

In this time, some, such as the CEO and co-founder of the bitcoin investment app Amber, Aleks Svetski, believe that the world pandemic and economic crisis have raised awareness of bitcoin. The economic turbulence caused by virus fears and lockdowns have lead governments toward bailouts and counterbalancing tactics such as money printing. Some believe that bitcoin’s original monetary policy was spurred by the runaway bailouts and money printing of the 2008 financial crisis. The current crisis is often likened to and expected to outlast that economic event. Svetski opined that such efforts are not healthy, creating a false sense security while unemployment continues to rise. Notably, before the coronavirus crisis and this new set of money printings and bailouts, since 2000, the quantity of US dollars in circulation has roughly tripled. 

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The Latest on the Bitcoin Halving

Bitcoin’s most recent trading was up 2.3% over the past 24 hours at $9,106. Steadily rising since May 13, bitcoin is trading above its 10-day and 50-day moving averages, which is promising for investors. However, what does it mean for less efficient miners? The most anticipated event in cryptocurrency for the year 2020, the Halving did usher in a slow but continuous rise in bitcoin prices. However, with the reward for mining having been halved to 6.25 BTC, the question lingers of whether miners will continue to be motivated to mine, and thus to maintain bitcoin’s security architecture. In essence, miners just took a 50% pay cut at a time of coronavirus-fueled economic uncertainty and instability, with the costs of mining having risen exponentially since 2009. At the dawn of bitcoin, mining individually at home was still feasible and far more rewarding three halving ago. Now, miners largely work in teams and through companies, for the computing power required and the costs of mining infrastructure and electrical requirements make mining individually both hardly feasible and financially prohibitive. However, one mining metric that immediately jumped after the Halving was miner revenue from fees, which went from 4.6% to 7% Wednesday. 

Will this third Halving cause some miners to bow out of what may already be an oversaturated labor market, and will the less efficient among the pack thus make way for the more successful? It’s possible that the dynamics may change, with exchanges having to charge more in trading fees to justify their operating expenses. 

The anticipation in the Halving lay with investors, whose hope that the new relative scarcity of bitcoin would make it even more valuable over time, assuming that demand stays the same. In fact, bitcoin’s price appreciation is steadily increasing, and with upheaval in traditional markets, it is outperforming several traditional assets, such as gold. As of Wednesday afternoon, other digital assets trading in the green were Ether, link, miners, and IOTA. Meanwhile in the commodities markets, oil trading, the headache of the last several months, is flat.