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Is the Worst Behind Bitcoin (BTC) Following Monday’s Price Drop?

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“Black Monday.” That is what the broader market termed Bitcoin’s (BTC) price correction from $58,000 to $49,000 on August 5. For experienced players who have seen the bull and bear of different cycles, that incident was not surprising.

While the event caused a plethora of large-scale liquidations, participants may wonder whether that was the worst one-day correction. This on-chain analysis gives more context to this thought.

Bitcoin Not Overvalued Yet, Future Gains Possible

To answer this question, BeInCrypto looks at key metrics that have repeatedly been recognized as crucial to BTC. One of them is the Market Value to Realized Value (MVRV) ratio. The MVRV ratio offers insights into the profitability of the market.

A spike in the ratio suggests that Bitcoin holders have a good level of unrealized gains, suggesting a higher probability of selling. However, when the ratio decreases, profits reduce, and holders have a lower chance of selling. 

Historically, this metric also tells when Bitcoin is undervalued, overvalued, and close to the peak of the cycle. At press time, data from IntoTheBlock shows that the MVRV Ratio is 1.76.

Bitcoin Market Value to Realized Value Ratio
Bitcoin Market Value to Realized Value Ratio. Source: IntoTheBlock

In past cycles, the ratio reached a higher reading than the bull market can be termed “over.”. However, despite BTC’s impressive price performance at some point, the metric shows that the price has not reached its peak.

Putting it into context, Juan Pellicer, Senior Researcher at IntoTheBlock, explained that BTC, like other cryptocurrencies, is yet to reach an overvalued point. 

“Most assets have yet to approach their historic overvaluation ranges. For example, Bitcoin’s highest MVRV this year peaked at around 2.64, whereas in the previous cycle, it reached as high as 3.68. For many altcoins, the difference is even larger.” Pellicer told BeInCrypto

Based on this comment and the historical analysis above, BTC’s recent decline is likely a discount. At press time, the coin trades at $57,255. This price means that it is still 22.37% down from the all-time high (ATH) it reached in March.

Retail Investors Hesitant, But There’s a Way Out

It is worth noting that institutional investors were the main driver of the rally to a new ATH through the Bitcoin ETFs. It is also important to mention that once the ETF netflow began to dry up, BTC price faced a notable decline.

In fact, amid the flash crash on August 5, netflows of the ETFs were negative. However, recent data shows that this may no longer be the case. This is because of the $45 million total daily netflow recorded on August 7. 

When compared to previous net positive flows, this is a low figure. At the same time, it could serve as the beginning of Bitcoin’s price stability, provided it is sustained.

Read More: What Is a Bitcoin ETF?

Bitcoin ETFs Netflows
Bitcoin ETFs Netflows. Source: SoSo Value

Should this be the case, this worst could be over for BTC, and the price may not drop below $50,000 again for a while.

Furthermore, Bitcoin’s potential does not lie solely in the capital these institutions have. Recall that, in previous bull markets, the coin did not have this kind of institutional adoption.

However, the coin has not experienced anything close to the kind of retail participation it had in the 2017 and 2021 market boom. During our conversation, Pellicer also weighed in on this, saying that:

“The number of active addresses on Bitcoin has been trending down since November 2023. This is typically a bearish sign for the entire market, as new participants in the Bitcoin market can serve as a proxy for new entrants to the industry.”

On several occasions, BeInCrypto noticed that a good level of retail interaction with BTC begins when the number of active addresses is over one million. But, according to Santiment, the metric has struggled to reach this region since March. 

Bitcoin Active Addresses
Bitcoin Active Addresses. Source: Santiment

However, on-chain shows an uptick in active addresses as it notched 717,000 at press time. If this metric continues to jump, then BTC’s price may slowly move upwards, erasing the chunk of losses it has had in recent times.

BTC Price Prediction: Bulls Want $60,000 First

From a technical perspective, Bitcoin may not experience such a massive price drop in the short term. This is because of the signals shown by the Balance of Power (BoP), a technical tool used to measure the strength of buying and selling in the market.

If it is negative, it means selling pressure is intense. However, at press time, it is positive, indicating that market participants are buying the coin. If this continues, BTC may note an uptick that may cost close to $60,000.

Additionally, the Bollinger Bands (BB) provide insight into the volatility around the coin. In simple terms, the BB shows how rapid price fluctuations may occur and tells if a coin is overbought or oversold.

When the indicator’s upper band hits the price, it is overbought. But when it touches the lower band, it is oversold. The image below shows that BTC was oversold on August 7, when the price was $54,594.

Read More: Bitcoin Halving History: Everything You Need To Know

Bitcoin Daily Analysis
Bitcoin Daily Analysis. Source: TradingView

The expanding bands, coupled with the recent buying pressure, suggest that the coin could continue to undergo a rebound. If this is the case, BTC may hit $60,534 in the short term. On a mid to long-term horizon,  the price could reach $71,996.

However, in a worst-case scenario, accompanied by intense selling pressure, BTC may drop to $54,482.

Disclaimer

In line with the Trust Project guidelines, this price analysis article is for informational purposes only and should not be considered financial or investment advice. BeInCrypto is committed to accurate, unbiased reporting, but market conditions are subject to change without notice. Always conduct your own research and consult with a professional before making any financial decisions. Please note that our Terms and ConditionsPrivacy Policy, and Disclaimers have been updated.



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Marathon Digital Raises $1B to Expand Bitcoin Holdings

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Marathon Digital Holdings, one of the largest Bitcoin miners, has completed a record $1 billion offering of 0% convertible senior notes due 2030. The net proceeds from the sale were approximately $980 million.

According to the firm’s statement, the net proceeds will be primarily used to buy Bitcoin

Marathon Digital Holds over $2.5 Billion Worth of Bitcoin

After its last purchase in September, Marathon Digital’s Bitcoin holdings stand at 25,945 BTC. This is currently worth approximately $2.52 billion, as Bitcoin reached an all-time high of $98,000 earlier today. 

However, the company’s decision to expand its holdings potentially points to a larger bullish cycle for the token in the long term. According to its press release, Marathon Digital plans to use $199 million of the net proceeds to repurchase existing convertible notes due 2026. 

The remainder will be used to acquire additional Bitcoin and for general corporate purposes. Marathon Digital is currently the second largest Bitcoin holder among publicly traded companies. 

marathon digital bitcoin holdings
Bitcoin Holdings by Public Companies. Source: CoinGecko

The notes offer flexibility, with options for conversion into cash, shares of Marathon’s common stock, or a combination of both. Redemption terms include the ability for the company to redeem the notes at full principal value plus accrued interest. 

“$1 Billion. 0% interest. MARA has completed the largest convertible notes offering ever amongst BTC miners. The mission, as always: Provide value. Acquire #bitcoin,” the company wrote on X (formerly Twitter). 

Increasing Bitcoin Acquisition Among Public Firms 

Marathon Digital is following an ongoing trend of public companies increasing their Bitcoin holdings in this bull market.  Earlier this week, MicroStrategy announced plans to issue $1.75 billion in convertible notes maturing in 2029. The proceeds will be used to fund additional Bitcoin purchases. 

On the same day, the company secured $4.6 billion worth of Bitcoin, building on a $2 billion acquisition from the prior week. 

Bitcoin’s all-time high and these aggressive purchases propelled MicroStrategy’s stock price by nearly 120% in a single month. The largest Bitcoin holder also entered the list of top 100 public companies in the US. 

Meanwhile, Marathon Digital has faced challenges despite its growing Bitcoin reserves. The company reported a $125 million net loss in Q3. This was driven by a $92 million year-over-year increase in operating costs. 

However, its operational capacity has strengthened. Earlier this month, its energized hash rate surged by 93%, signaling increased mining efficiency. Marathon Digital also signed an $80 million agreement with the Keynan government to expand its Bitcoin mining capabilities. 

Disclaimer

In adherence to the Trust Project guidelines, BeInCrypto is committed to unbiased, transparent reporting. This news article aims to provide accurate, timely information. However, readers are advised to verify facts independently and consult with a professional before making any decisions based on this content. Please note that our Terms and ConditionsPrivacy Policy, and Disclaimers have been updated.



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cbBTC Surges Past $1 Billion as Coinbase Ends WBTC Support

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Coinbase, the largest US-based crypto exchange, has announced it will suspend trading for Wrapped Bitcoin (WBTC) on December 19, 2024, at approximately 12 p.m. ET.

The decision, revealed in a post on X (formerly Twitter), cites a routine review of its listed assets to ensure compliance with listing standards. 

Coinbase Sidesteps WBTC Amid cbBTC Boom

The suspension will apply to both Coinbase Exchange and Coinbase Prime. Although trading will cease, WBTC holders will retain full access to their funds and the ability to withdraw them at any time. In preparation for the transition, Coinbase has moved WBTC trading to a limit-only mode, where users can place and cancel limit orders while matches may still occur.

“Coinbase will suspend trading for WBTC (WBTC) on December 19, 2024, at or around 12 pm ET. Your WBTC funds will remain accessible to you, and you will continue to have the ability to withdraw your funds at any time. We have moved our WBTC order books to limit-only mode. Limit orders can be placed and canceled, and matches may occur,” Coinbase detailed.

Coinbase’s move to suspend WBTC comes amid the rapid success of its wrapped Bitcoin token, cbBTC. Recently, cbBTC surpassed a $1 billion market capitalization, reflecting growing adoption and trust within the crypto community. This milestone has further cemented cbBTC’s position as a strong competitor to WBTC in the decentralized finance (DeFi) space.

oinbase’s cbBTC Bitcoin Wrapper Supply and Market Cap Chart
Coinbase’s cbBTC Bitcoin Wrapper Supply and Market Cap Chart. Source: Dune

As of this writing, data on Dune shows that cbBTC market capitalization has increased to $1.44 billion. CBTC’s native availability on networks like Solana, Ethereum, and Base has significantly expanded its accessibility, with Arbitrum being the latest addition.

“cbBTC is live on Arbitrum. cbBTC is an ERC-20 token that is backed 1:1 by Bitcoin (BTC) held by Coinbase. It is natively available on Arbitrum and securely accessible to more users across the Ethereum ecosystem,” Coinbase shared on Tuesday.

Additionally, prominent DeFi protocol Aave is targeting cbBTC for its Version 3 (V3) platform, enhancing its utility within the ecosystem. This growing momentum may have played a key role in Coinbase’s decision to phase out WBTC trading.

WBTC Core Team Urge Coinbase to Reconsider

The team behind Wrapped Bitcoin expressed regret and surprise at Coinbase’s decision. In a statement on X, WBTC’s core team emphasized its commitment to compliance, transparency, and decentralization. 

“We regret and are surprised by Coinbase’s decision to delist WBTC…We urge Coinbase to reconsider this decision and continue supporting WBTC trading,” the team said.

The statement outlined WBTC’s longstanding reputation for novel mechanisms, regulatory compliance, and decentralized governance. Highlighting its seamless integration with DeFi protocols, WBTC described itself as an essential liquidity solution for Bitcoin users. Urging Coinbase to reconsider, WBTC reaffirmed its readiness to address any concerns or provide additional information to support its case.

Meanwhile, Coinbase’s announcement has sparked mixed reactions across the crypto community. Some users criticized the exchange, suggesting the decision reflects an inability to handle competition.

“Coinbase can’t handle fair competition?? WBTC superior to cbBTC” said Gally Sama in a post.

Nevertheless, others support the move, citing concerns over WBTC’s custody model, with one user referencing BitGo’s recent adoption of a multi-jurisdictional custody system.

“You put custody in the hands of a fraud. What did you think was gonna happen?” the user expressed.

This critique aligns with growing fears about Justin Sun’s involvement in WBTC’s custody processes, as BeInCrypto reported recently. Some users have acted preemptively to avoid potential risks, with one commenter sharing their reservations.  

“When Sun got on the multisig for WBTC, I sent all my WBTC on OP to Coinbase and exchanged for true BTC that I withdrew to my hardware wallet… You gave me confirmation just now that I made the right move,” they wrote.

The decision to suspend WBTC trading could mark a pivotal moment in the competition between wrapped Bitcoin solutions. While cbBTC’s integration across multiple blockchain networks has gained momentum, skepticism surrounding WBTC’s custody model and leadership has intensified.

Justin Sun has voiced criticism of Coinbase’s cbBTC strategy, labeling it a setback for Bitcoin’s broader adoption. As the debate continues, the industry watches closely to see whether Coinbase’s cbBTC will solidify its dominance or if WBTC can regain its position as a leading wrapped Bitcoin solution. Regardless, the shifting dynamics reflect the importance of transparency, governance, and community trust in shaping the future of DeFi.

Disclaimer

In adherence to the Trust Project guidelines, BeInCrypto is committed to unbiased, transparent reporting. This news article aims to provide accurate, timely information. However, readers are advised to verify facts independently and consult with a professional before making any decisions based on this content. Please note that our Terms and ConditionsPrivacy Policy, and Disclaimers have been updated.



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Bitcoin Faces ‘Bank Run’ Risk, Cyber Capital’s Bons Warns

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Bitcoin (BTC) may be at risk of a catastrophic “bank run,” according to Justin Bons, founder and CIO of Cyber Capital.  

A bank run is when customers withdraw their deposits from a financial institution over fears of insolvency. 

Bitcoin Cannot Handle Mass Exits, Bons Says

In a detailed social media thread, Bons highlighted critical flaws in Bitcoin’s transaction capacity, self-custody model, and network security. In his opinion, these could lead to a crisis that would destabilize the network and devastate investors. 

Bons’ analysis centers on Bitcoin’s limited transaction processing capability, which he calculated at approximately seven transactions per second (TPS). Using data from Glassnode and Bitcoin’s code, he argued that Bitcoin’s 33 million on-chain users would face a bottleneck if a mass panic triggered simultaneous exits. 

“At this rate, the queue would be 1.82 months long under optimal conditions. However, in reality, transactions would get stuck and eventually be dropped, making it impossible for smaller parties to exit unless they pay exorbitant fees,” Bons explained.

Bons warned that this limitation could lead to a “death spiral,” where a price crash forces miners to shut down, slowing the network further. The resulting delays could deepen the panic, creating a vicious cycle of declining hash rates, prolonged block times, and falling prices. 

Further in his critique of BTC, Bons claimed Bitcoin’s transaction capacity is insufficient for real-world use. He compared Bitcoin’s 7 TPS to other systems, such as Visa’s 5,000 TPS, or even competitors in the crypto space that exceed 10,000 TPS without sacrificing decentralization. 

“There are literally ZERO use cases that can be supported by 7 TPS. Mass self-custody over BTC is a dangerous narrative. The only scalable path forward for BTC adoption is through centralized custodians and banks, contradicting its ethos as ‘freedom money’,” he stated.  

Bons also questioned Bitcoin’s long-term sustainability, citing its shrinking security budget. This, in his opinion, is a critical issue that could exacerbate the risks he outlined. The thread also touches on Bitcoin’s deviation from its original vision as “peer-to-peer (P2P) electronic cash.” He lamented that the network’s constraints and governance have turned it into a speculative asset rather than a practical medium of exchange. 

Bons’ remarks ignited a heated debate on X (formerly Twitter). Patrick Flanagan, a self-described tech expert, dismissed the claims.

“This is pure fantasy. If this was going to occur, it would have occurred years ago,” Flanagan argued.

Bons rebutted, asserting that the risk increases as the number of users grows. He noted that even a fraction of users leaving could trigger a run and added that the larger the network gets, the more severe the problem becomes.

Other users highlighted potential alternatives, such as trading wrapped Bitcoin (WBTC) on Ethereum, which bypasses Bitcoin’s base layer limitations. Bons acknowledged this but noted that wrapped BTC users could exit quickly while on-chain users would be trapped, exacerbating the sell-off.  The discussion also extended to Bitcoin’s self-custody model.

“This is something that self-custody advocates should pay attention to. One tiny bit of FUD and everyone gets their money stuck,” DashPay’s Joel Venezuela remarked.

Bons responded, acknowledging the difficult position he finds himself in as a cypherpunk and self-custody advocate. Another user raised a comparison to gold, questioning how long it would take to liquidate global gold holdings. Bons countered that while gold also has practical limits, its theoretical transaction capacity far exceeds Bitcoin’s, making it less susceptible to such bottlenecks. 

Critics of Bons’ analysis argue that Bitcoin has weathered similar concerns in the past without collapsing. However, his warning adds to a growing chorus of voices calling for a reevaluation of Bitcoin’s scalability and usability. 

Despite his grim outlook for Bitcoin, Bons remains optimistic about the broader cryptocurrency space. “There is much hope left for cryptocurrency as a whole,” he concluded, suggesting that Bitcoin’s original ethos now thrives in other blockchain projects. 

Meanwhile, while Bitcoin remains the dominant cryptocurrency, debates over its scalability and resilience continue. Bons’ warning serves as a stark reminder of the challenges Bitcoin faces as it seeks broader adoption in a changing financial space. Elsewhere, Galaxy CEO Mike Novogratz has almost similar reservations about a Bitcoin reserve in the US.

“I think that it would be very smart for the United States to take the Bitcoin they have and maybe add some to it… I don’t necessarily think that the dollar needs anything to back it up,” Novogratz claimed.

Disclaimer

In adherence to the Trust Project guidelines, BeInCrypto is committed to unbiased, transparent reporting. This news article aims to provide accurate, timely information. However, readers are advised to verify facts independently and consult with a professional before making any decisions based on this content. Please note that our Terms and ConditionsPrivacy Policy, and Disclaimers have been updated.



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