Autor Cointelegraph By Ray Salmond

Bitcoin miner profitability under threat as hash rate hits new all-time high

The Bitcoin hash rate hit a new all-time high above 245 EH/s on Oct. 3, but at the same time, BTC miner profitability is near the lowest levels on record. With prices in the low $20,000 range and the estimated network-wide cost of production at $12,140, Glassnode analysis suggests “that miners are somewhat on the cusp of acute income distress.”Bitcoin network hash rate. Source: Hashrate IndexGenerally, difficulty, a measure of how “difficult” it is to mine a block, is a component of determining the production cost of mining Bitcoin. Higher difficulty means additional computing power is required to mine a new block. Utilizing a Difficulty Regression Model, the data shows an R2 coefficient of 0.944 and the last time the model flashed signs of the miners’ distress was during BTC’s flush out to $17,840. Currently, it hovers near $18,300, which is not far from the price range seen in the past two weeks. Bitcoin: Difficulty regression model. Source: glassnodeThe hash rate hitting a new all-time high effectively means that miner margins will be further squeezed and outfits that are unprofitable can either mine at a loss, assuming that BTC’s future price will eventually make up for the cost difference, or they can unplug and wait until either the difficulty drops or energy costs improve. With the recent rise in hash rate, the difficulty is also likely to rise in the next week, with estimates pointing to a 6% to 10% adjustment.Bitcoin network hash rate (left) and projected difficulty adjustment (right). Source: BTC.comShown below are estimations of miner profitability assuming an electricity rate of $0.08 kw/h. Bitcoin ASIC profitability. Source: DxPoolDepending on a miners’ capital costs and operational costs, the profit stats above clearly illustrate the tightrope some miners are attempting to balance on at the moment. Despite the stress on profitability, independent market analyst Zack Voell suggested that miners with healthy balance sheets are constantly looking for ways to expand their operations and the recent surge in hash rate could be related to Bitmain’s newest S19 XPs coming online. Miners who aren’t broke or suing each other continuing to deploy what they can. Every month has a couple headlines (at least ) about new facilities being planned or energized. And a lot of the new hashrate is from XPs coming online— Zack Voell (@zackvoell) October 3, 2022Is Bitcoin in the clear? What investors really want to know is whether or not Bitcoin price is in the clear or whether there is an elevated risk of another sell-off driven by miner capitulation. According to Colin Harper, the head of research at Luxor Technologies: “Miners are still selling in the current environment (for example, Riot sold 300 BTC last month and Bitfarms sold 544 BTC). By my estimation, we’re more likely to be driven lower by general selling, not miner selling particularly. If BTC price does go to $10,000, in addition to more miners capitulating via BTC sales, there would also be a lot of rigs flooding the market. We are not trying to single out Riot or Bitfarms, these are just the current updates we have, besides Hut 8, which didn’t sell any BTC.”On the other hand, Joe Burnett, the head analyst at Blockware Solutions, said that the bulk of miner selling has likely passed, which reduces the possibility of another capitulation level sell-off. Burnett told Cointelegraph: “I think the small miner capitulation Bitcoin experienced this summer knocked out some weak and overleveraged players. I do not think we will see another significant drop in hash rate without Bitcoin making new lows below $17,600. It doesn’t mean individual weak miners won’t drop off this year and next, but the new gen rigs getting plugged in will likely be enough to keep hash rate trending upward.”When asked about the surge in hash rate placing pressure on higher difficulty adjustments and the knock-on-effect on miner profitability, Burnett said: “For sure. Individual weak players may drop off and get knocked out, but it won’t be a significant and sudden “miner capitulation” without a drop in BTC price. Margins are definitely tight.”According to Glassnode, their model of the “implied income stress of the Puell Multiple, with the explicit stress observation of the Difficulty Ribbon Compression” recently exited the zone where “miner capitulation is statistically likely,” suggesting that another miner-driven sell-off is unlikely at the moment.Bitcoin miner capitulation risk. Source: glassnodeThe analysts, however, were careful to stress that the aggregate size of Bitcoin held by miners is near 78,400 and any sharp downside move in BTC price could trigger selling from distressed mining outlets.The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Every investment and trading move involves risk, you should conduct your own research when making a decision.

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Bitcoin price fails to hold $20K again, but there is a silver lining

Markets briefly flashed green on Sept. 27 as equities markets bounced back from Sept. 26’s pullback, bringing the Bitcoin (BTC) price back to the long-term descending trendline resistance, which currently resides at $20,100. Unfortunately for bulls, the positive momentum for stocks and cryptocurrencies rapidly eroded and Bitcoin price gave up a majority of the intraday gains as it slipped back below $19,000. As has been the case since March 25, BTC price has been unable to kick above the resistance for more than a few hours and the Sept. 27 breakdown at the trendline continues the trend of successive bear flags that see a continuation to the downside. BTC/USD 1-day chart. Source: TradingViewAccording to Arcane Research, Bitcoin’s tight rally above $20,000 is relatively insignificant, given that futures premiums are still low and it “contributes little to improving the market risk appetite.” BTC perpetual contract funding rate versus Bitcoin price. Source: Arcane ResearchAdditional data from Arcane Research shows funding rates flipping neutral for the first time since Sept. 13, but generally, traders are reluctant to add longs, given the concerns over macro challenges and the continuous threat of unfriendly crypto regulation. There is a silver liningAs mentioned in previous analysis, despite the breakouts and breakdowns, BTC price is simply trading within the exact same $24,300 to $17,600 range of the past 103 days. To date, a catalyst to set off a breakdown below swing lows or to push price above resistance and confirm the former hurdle as support has yet to occur. Fortunately, it’s not all doom and gloom for Bitcoin. A positive bit of news comes from on-chain analytics provider Glassnode, who noted that more mature investors have decided to hunker down and hold their positions rather than sell at the current price. According to the Revived Supply 1+ Years metric, an indicator that tracks the “total amount of coins that come back into circulation after being untouched for at least 1 year,” the flow of latent supply shifting back into the active supply pool is “extremely low.” Revived Supply 1 year+ Z Score. Source: glassnodeThe compression in mature spending seen in the last stages of the 2018 bull market is not present during the most recent revisits below $20,000, suggesting that long-term holders are well accustomed to volatility and unwilling to sell at the current prices. Revived Supply 1 year+ Z Score. Source: glassnodeGiven that BTC is 72% down from its all-time high and a portion of investors expect prices to crumble toward $10,000 in the next unexpected capitulation event, one could interpret the lack of panic selling from mature investors as positive. The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Every investment and trading move involves risk, you should conduct your own research when making a decision.

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XRP price breaks out of range with a 25% rally, but why?

Crypto markets are flashing a bit of green on Sept. 22 as Bitcoin (BTC) price tacked on a 4.7% gain to trade above $19,300 and Ether (ETH) surged 6.5% to recapture the $1,300 level. RSR and Astar Network (ASTAR) also surged by 23% and 17% respectively, but the more notable mover of the day was XRP. Currently, XRP price reflects a near 25% gain and the asset is up 41% in the past month. According to defense lawyer James K. Filan, on Sept. 18, Ripple Labs filed a motion for summary judgment — a legal process that involves the court making a final decision based on the provided facts, rather than ordering a trial — and a decision on whether XRP is a security is expected by mid-December. #XRPCommunity #SECGov v. #Ripple #XRP 1/2 The parties have filed a request that any motions by third-parties to seal portions of the parties’ summary judgment filings be filed subject to the Court’s September 12, 2022 order.— James K. Filan 113k (beware of imposters) (@FilanLaw) September 19, 2022Excitement over the news could be improving investor sentiment about the longer-term prospects for XRP. Related: Crypto and stocks soften ahead of Fed rate hike, but XRP, ALGO and LDO look ‘interesting’From the perspective of technical analysis, XRP price is looking to secure a second daily close above a longterm descending trendline resistance and trading volumes and open interest on futures contracts have risen sharply in the past 24-hours. XRP/USDT 1-day chart. Source: TradingViewAccording to Cointelegraph market analyst Marcel Pechman: “XRP’s open interest is now at $575 million up from $310 million just a week ago.” Traders who are not yet positioned might consider waiting to see if the 200-day moving average at $0.49 is flipped to support over the next few daily closes. Typically, intraday and swing traders take profit at longer term resistance levels and they also anticipate price rejections and lower support retests after an asset manages a breakout from a period of long consolidation, price bottom or a market structure-altering move. Crypto analytics data provider TheKingfisher drove a similar point by suggesting that buyers would “likely have an opportunity to long XRP lower.”You’ll likely have an opportunity to long $XRP lower if that’s what you’re looking for Don’t FOMO, Long the long liquidations— TheKingfisher (@kingfisher_btc) September 22, 2022

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Every investment and trading move involves risk, you should conduct your own research when making a decision.

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Crypto and stocks soften ahead of Fed rate hike, but XRP, ALGO and LDO look ‘interesting’

Prices remain soft across the market as traders await Federal Reserve Chair Jerome Powell’s statement on the size of the next interest rate hike. At the moment, the market consensus is a 0.75 bps rate hike and a sliver of analysts are banking on 1%. Stocks also appear en-route to close the day in the red, with the Dow down 0.75%, and the S&P 500 and Nasdaq registering a 0.79% and 0.64% loss. Bitcoin continues to fight what appears to be a losing battle at the $19,000 mark, while Ether (ETH) dug a little deeper into its post-Merge dip by making an intra-day low at $1,329. While BTC, Ether and altcoins aren’t making any notable moves that defy the current downtrend, from the perspective of market structure and technical analysis, there are a few interesting developments occurring. Lido (LDO) has corrected alongside Ethereum now that the Merge-trade fervor has subsided, but the asset currently trades in what some would say is a bull flag. While ETH bulls and traders might have taken profits on their long Ether positions, the Merge was a success, stakers and validators still derive yield from the altcoin and the fundamentals that turned investors bullish on Ether remain present. Ideally, if Ether’s DApps and active users continue to expand and traders keep accumulating, then in an otherwise down market, yield should be a capital magnet no? LDO/USDT 1-day chart. Source: TradingViewFrom a market structure point of view Ripple (XRP) looks interesting, and there’s been a ton of social chatter about it on Twitter lately. Following the usual hopium-laced narrative, members of the XRP army have been suggesting that if XRP beats its SEC case and is not deemed a security, the price could “moon.” Of course, solid fundamentals and signs of growth via new address and an in-demand product to market fit should drive investments, but in the absence of that, the market structure does look interesting. XRP/USDT 1-day chart. Source: TradingViewBasically, there’s pre-bull market precedent of a lengthy consolidation phase within a rounding bottom that is somewhat similar to what we can see from the last 137 days. Volumes are kicking up, price broke through a long-term descending trendline that has historically served as resistance and from the perspective of XRP’s HTF market structure, one might conclude that a price bottom has been found. But as a word of caution, hype and expectation tend to trigger volume surges. Regardless of whether the SEC decides that XRP is a security or the opposite, investor excitement could still peter out and the price could simply trade in the same sideways range in perpetuity or until the “next bull market.” Related: Price analysis 9/19: BTC, ETH, BNB, XRP, ADA, SOL, DOGE, DOT, MATIC, SHIBALGO/USDT 2-day chart. Source: TradingViewAlgorand’s (ALGO) market structure also looks interesting. Price fully retraced the complete bull market rally and now trades in the same range as it did in 2019 and 2020. Occasional buy volume pops haven’t been sustained for long enough to clear the $0.40 level, but things could get spicy if a few daily closes above this zone and a test of the 200-MA at $0.48 occurred. If the wider market began to consolidate and ALGO buy volume sustains, flipping this moving average to support could see upside to $0.69, and daily closes above $0.80 would set a significant higher high that would indicate confirmation of a trend reversal. As a disclaimer, these charts simply reflect assets that look “interesting.” Currently, the market is still overwhelmingly bearish and large caps like BTC and ETH have yet to find a bottom. Ultimately, it’s the Federal Reserve that is calling the shots on what happens in risk assets like crypto. So take these snapshots with a grain of salt and proceed with caution. The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Every investment and trading move involves risk, you should conduct your own research when making a decision.

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Bitcoin is trapped in a downtrend, but a ‘trifecta of positives’ scream ‘deep value’

$20,000 is no longer support. $100,000 didn’t happen. The Bitcoin halving is 562 days away.Bears simply refuse to release their vice grip on the market and the Federal Reserve’s policy of interest rate hikes and quantitative tightening is adding fuel to the fire. Despite these challenges, in a Sept. 15 Twitter Space hosted by Cointelegraph, Capriole Fund founder Charles Edwards explained why he is still bullish on Bitcoin. Edwards said that several on-chain metrics suggest that BTC is undervalued: “I see incredible deep value and I kind of call it a trifecta and that we have three positive things happening in my mind. One is cycle timing, where between years two and three, which historically has been where all of the Bitcoin cycles are bottomed. The second is that we’ve hit 90% of normal cycle down draws. Now, obviously, all of these things can go lower, but that alone is a bit of a good value signal. And then thirdly, just the readings across pretty much all on-chain metrics, whether it be Mayer Multiple, whether it be Puell Multiple, or NVT or dormancy, everything is at kind of one in four year level discounts. So for me, it’s kind of that once a cycle opportunity that we see at the moment.”When asked about his thoughts on the previous Bitcoin halving and how the current economic environment might impact the next halving, Edwards said: “I think it was successful because it placed Bitcoin as one of the hardest assets in the world in the midst of massive monetary printing. And we did see a lot of the old school traditional finance, legendary investors, Druckenmiller, etc. kind of get into Bitcoin because of that as it’s kind of a hedge more or less. And that kind of triggered the next 6 to 12 months of rallying. I also think that the crypto industry still does run on the Bitcoin halving cycle kind of time frame. For now. I don’t think they will continue forever, but for now I do still think it holds weight and impact in how people invest in the space. With each subsequent halving the incremental value of the drop in inflation for bitcoin is negligible because it’s already — barring Ethereum — now the hardest asset, or harder than gold.”2022 has proved that risk management and building a balanced portfolio is still a skillset crypto investors are working to develop. Edwards said: “Whatever your method is, however you are trading or investing, whether using stop losses or not as a strategy. You need to do some detailed modeling over as much data as you can and not just two years of data, because that’s how entities have blown up in the past. Do as much as you can, like 10 years of Bitcoin at least, and assume the worst and then add again an element of buffer below that to manage your position sizing.”Tune in and listen to the full episode!Disclaimer. Cointelegraph does not endorse any content of product on this page. While we aim at providing you all important information that we could obtain, readers should do their own research before taking any actions related to the company and carry full responsibility for their decisions, nor this article can be considered as an investment advice.

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