Cryptic ball: miners in China are hibernating too.
We have to take Thursday and Friday off, so this newsletter will focus on what can happen until next Monday. So far, BTC has consolidated yesterday's bottom and the rest of the market is following the lead. Traders now understand that the Bitcoin miners who have left China - as evidenced by the 50% drop in hashrate (the processing power dedicated to mining - are shipping their hardware to other countries with cheap renewables and that the easy short opp is over.
CoinMetrics also reported that potential sales of bitcoin by miners have diminished to normal levels, after peaking on May 19th - likely to cope with the costs associated with the move. This is another very positive sign, as persistent selling pressure from this group is one of the largest contributors to depressed prices. But can we say the war between bulls and bears is over? Certainly not, so let's see the scenarios you should consider in order to plan the next days.
Chart art: maybe bears will also join the hibernation.
Market musings: ether bulls must not hibernate.
As you can see above, bitcoin has recovered 20% since yesterday's bottom, while many alts have pumped 65%! Such a massive move usually means the next days can be a bit boring, as those who longed the current bottom take profits and even flip short at key resistances (like $35k) for a quick buck. Especially because as we fade into the weekend we'll miss the push given by the recent fall of the US dollar index, as explained yesterday, given that forex markets aren't open. Now, zooming out to the daily, bitcoin remains below the 200-day MA and the death cross meme is finally a reality since Monday or yesterday, depending on the exchange.
While it feels like the narrative behind this lagging indicator and behind the head & shoulders meme are losing strength following yesterday's volatility, it could have also been a short the rumour, long the news kind of event. So you should at least consider the possibility of further downside if we test the bottom of this range again, as Rekt Capital explains. That theory is aided by the fact that ether has just fallen below its 200-day moving average for the first time since April 2020 and hasn't recovered yet. More alts are in the same situation, so keep following them as are still plenty of incentives to short the many cryptoassets which have done +100x over the past year: it's all about ETH recovering $2k as soon as possible!
Visual block: blockchain never hibernates.
Three things: the algo bots at Alameda don't hibernate.
- Sam Trabucco, a quant trader at Alameda Research, explains yesterday's panic and shares more examples about how you can use funding rates and liquidation alarms to trade. We've been telling you this for long!
- Nic Carter, founder of CoinMetrics and Castle Island Ventures, explains the reasons behind the "great hashrate migration" from China to the West. It makes Bitcoin more resilient to future FUD from China.
- Noah Smith, a Bloomberg journalist, interviewed the legendary entrepreneur and VC Marc Andresessen. This long read is the last must-read we share as the investor shares why he is very bullish on crypto and blockchain.