Four Things That I Like About The Current State of Bitcoin (#GotBitcoin?)
Bitcoin (BTC) now makes up 50 percent of the entire cryptocurrency market capitalization. Four Things That I Like About The Current State of Bitcoin
Shortly past 03:00 UTC on August 11, CoinMarketCap’s bitcoin dominance rate – an indicator that tracks the percent of the total cryptocurrency market capitalization contributed by the leading cryptocurrency – reached 50 percent for the first time since December 19th, 2017.
At press time, bitcoin’s market capitalization now records $105,785,552,545, which is about $901 million more than the market capitalization of every other cryptocurrency combined.
The above chart shows bitcoin’s dominance rate has been on a steady incline over the past few months, currently representing a 14 percent increase from May 1st. In the same time period the market dominance of all other cryptocurrencies have largely been on the decline.
Conditions were much different the last time bitcoin’s market dominance was above 50 percent.
On Dec. 19th, the average price of BTC was $17,605.81 across exchanges – an 65 percent higher price than the cryptocurrency’s value today, according to the CoinDesk Bitcoin Price Index.
It’s one indication of the faith people have in the market.
Bitcoin (BTC) dominance is the percentage of cryptocurrency’s total market capitalization accounted for by Bitcoin, and it has reached a near-three month high.
According to CoinMarketCap, BTC dominance is now 42.6% of the market, its highest since April 15th. Its increase has occurred at the same time as the market’s total value experienced a downtrend.
Since the 9th of June, cryptocurrency’s total market cap has fallen by around 25% from around $340bn to its present valuation of $256bn: a near $100bn loss. BTC dominance has risen by 3% in the past two weeks and by around 4% since the beginning of the month.
Although bitcoin has experienced a price decline, falling, over the same time period, from $7,603 to $6,600, it is below that of the market in general, suggesting investors are buying more BTC than other cryptocurrencies.
What Does Bitcoin Dominance Mean?
Bitcoin dominance is used to measure how much BTC is worth, as a percentage of all cryptocurrency values. During prolonged market shifts, it can also highlight whether demand for Bitcoin is staying above that of the market average.
When the market’s value has begun to increase; BTC dominance has declined. Between February and June of last year, for example, Bitcoin’s market share halved from over 85% to 37%.
Although Bitcoin’s value nearly trebled during this same timeframe, other cryptocurrencies also received investor attention: Ethereum’s value went from representing 17% of the entire crypto market to 31%.
Bitcoin is the ‘gateway coin’ for a lot of investors; they buy BTC before purchasing other coins. This can be in part because of its near-universal listing on every active crypto exchange, but also because of its high-profile and low volatility (which is something of a relative statement).
Most people have heard of Bitcoin. Data collected by Google Trends highlights that although Internet searches on the platform have fallen since January, ‘bitcoin’ has been searched almost five times more frequently than ‘cryptocurrency’, even in the past 90 days.
When crypto enters a bearish trend, BTC dominance often increases. Its relatively low volatility means investors can maintain (some) value with their funds. During market declines, this makes it a convenient asset for investors looking to keep their money in cryptocurrency but wanting to minimize risk.
And for those who have the stomach, there’s always Tether.
Following Bitcoin’s monumental run-up to $20,000 in late 2017, prices began to fall, and have barely stopped to breath on the way down. As it stands, the price of BTC has declined by over 60% since its all-time high, rightfully leading some to believe that mining activity fell in correlation with prices. But crypto miners have seemingly shrugged off the drop, with the Bitcoin hashrate establishing new highs on a near-weekly basis.
Bitcoin Hashrate Rises Amidst Bearish Market
While Bitcoin’s hashrate figure has been on an unrelenting crusade upwards for the better part of a decade, in the past 72 hours, Bitcoin’s hashrate has seen a non-linear spike to the upside. As per data compiled by Blockchain, a US-based crypto infrastructure firm, the hashrate of the network saw a 35% run-up on Saturday and Sunday to a breath-taking ATH of 62 EH/s (quadrillion hashes/second)
Many quickly speculated on the source of this astronomical gain. Armin Van Bitcoin, a Canadian cryptocurrency commentator and analyst, took to Twitter to reveal that firms are showing interest in establishing new data centers, showing a picture of hundreds of Antminers up and running in a Kazakhstan facility.
Lots of new miners entering the game. This one is from Kazakhstan. 🇰🇿⛏️👏 #bitcoin pic.twitter.com/M3ledGOvmx
— A v B ⚡ (@ArminVanBitcoin) August 29, 2018
Some theorized that Bitmain and other ASIC manufacturers have begun to exclusively roll out machines that output exorbitant amounts of hashes per second.
Does Price Follow Mining Activity?
Regardless of the reason, many analysts still agree that a surging hashrate statistic may indicate future price action, as such a figure alludes to the amount of interest backing a PoW crypto asset. Max Keiser, journalist, crypto analyst and filmmaker extraordinaire, revealed that according to his “HR analysis,” a new ATH could be within Bitcoin’s grasp in the new future. Keiser added that Bitcoin could reach and surpass $28,000 if hashrates remain steady.
This sentiment was echoed by Bobby Lee, the co-founder of BTCC, who claimed that Bitcoin could reach $60,000 on the back of mining-related costs and the next block halving alone.
After next #BlockRewardHalving in Spring of 2020, new #Bitcoin output will drop again, to just 900 BTC/day.
I predict #HashPower will continue to grow, with ever higher amounts of investment in mining (electricity costs).
If that amount reaches $54m/day, we‘ll have $BTC at $60k.
— Bobby Lee (@bobbyclee) August 25, 2018
Backing this prediction, Lee, who is also Litecoin founder Charlie Lee’s brother, noted that an increased hashrate will see electricity costs pertaining to mining rise as well. He then indicated that this is a case of “simple math” that could push Bitcoin over $60,000 by 2020. David Sapper, the COO (Chief Operating Officer) of the Blockbid crypto exchange, added that not only does a rising hashrate indicate higher prices, but a long-term belief in this nascent industry. He explained:
“The increased hash rate means people are here for the long-term because they’re happy to just accumulate what they have, potentially even run at a loss. At the same time, At the same time, they do sometimes have to clear house and dump (though).”
Taking these statements into account, it becomes clear that although the short-term prospects for this market may look dismal, the never-ending increase of hashrates across the board is solid proof that many hold faith in Bitcoin, even in the roughest of waves.
The bitcoin market has gone comatose today with a key volatility reading hitting fresh yearly lows.
The daily bitcoin volatility, as represented by the spread between the daily price high and price low (as per UTC), currently stands at $84 – the lowest level since July 9, 2017 – according to CoinDesk’s Bitcoin Price Index (BPI). Back then, the spread was seen at $68.
Assuming that this differential remains at $84 until 00:00 UTC hours, we can say that bitcoin’s daily volatility has hit a 13-month low Friday.
The reading is of particular importance for traders as the drop in the volatility is often a precursor to the big move in prices. For instance, the daily volatility jumped to $389 on July 10, after having hit a yearly low of $97.21 on July 8.
On similar lines, the daily range spiked to $850 on June 10, after printing a low of $107 on June 7.
The data gels well with technical theory, which states that the longer the period of consolidation (low volatility period), the more violent the breakout tends to be.
Accordingly, we could be in for a big move in the next few days, possibly on the higher side as the technicals are biased toward the bulls and the BTC/USD shorts on Bitfinex are near record highs, meaning the cryptocurrency is vulnerable to a short covering rally.
All in all, the bitcoin daily volatility has hit 13-month lows at a time when the path of least resistance for bitcoin is on the higher side. So, it seems safe to say a big bullish move is overdue.
However, a break below the key support of $6,230 (Aug. 20 low) would invalidate the bullish view put forward by the technical studies.
The bearish sentiment in the bitcoin (BTC) futures market hit a record low last week, indicating that the worst of the leading cryptocurrency’s price plunge just might be in the past.
The non-commercial futures contracts of bitcoin, traded by large speculators and hedge funds, totaled a net position of -1266 contracts in the week ended Aug. 21 – the lowest on record, according to the data released by the Commodity Futures Trading Commission (CFTC) on Friday.
The futures data indicates that the speculators are the least bearish on BTC since the futures were first listed back in December.
A negative total represents net short positions (bearish bets) and a positive tally indicates net long positions (bullish bets).
The sharp drop in the bearish sentiment, as represented by the steady decline in the net short positions from the high of -1945 seen ten weeks ago to -1266, adds credence to the signs of bearish exhaustion indicated by BTC’s defense of $6,000 since mid-June.
At press time, BTC is changing hands at $6,715 on Bitfinex.