- With bitcoin’s rise to 17-month highs, the Mayer multiple (a ratio of price to the 200-day moving average) is teasing a break above 2.40 – a level that has marked the beginning of speculative bubbles in the past.
- BTC may see a short-lived spike to resistances at $17,230 (January 2018 high) and possibly to $20,000 (record high) if the Mayer multiple finds acceptance above 2.40.
- The hourly chart is flashing signs of buyer exhaustion, however, so a correction to $11,000 cannot be ruled out.
- A UTC close below the May 31 high of $9,097 would abort the bullish view.
Bitcoin’s (BTC) surging price over the last week is reminiscent of the bull market frenzy observed a year and a half ago.
The leading cryptocurrency by market value rose to a 17-month high of $12,936 on Bitstamp earlier today. At that price, the cryptocurrency was up $3,900 from the level of $9,036 seen a week ago.
Notably, with the near 90-degree rally to 17-month highs, the ratio of bitcoin’s price to the 200-day price average – known as Mayer multiple – printed a high of 2.42, a level which was last seen in early January 2018.
The Mayer multiple essentially quantifies the spread between the price and the 200-day MA. An above-1.0 ratio indicates BTC is in bull market territory above the 200-day MA, while a reading below one implies the cryptocurrency is in a bear market below the 200-day MA.
That said, over the years it has been observed that a reading above 2.4 signifies the beginning of a temporary speculative bubble – a self-feeding cycle of higher prices attracting more bids, leading to further rally.
The Mayer multiple rose above 2.4 on Mar. 4, 2013, when the price was trading at $36.00, representing 176 percent gains over lows near $13 seen in December 2012. More importantly, the cryptocurrency rallied more than 600 percent to $259 in the following four weeks before falling all the way back to $45 on April 12.
Further, prices rose from $11,000 to $20,000 in 16 days following the ratio’s rise above 2.4 percent on Dec. 1, 2018. Again, the bubble was short-lived, with prices falling to $12,000 on Dec. 22.
On similar lines, BTC had gone ballistic, rallying by more than 300 percent to $1,163 in three weeks following the Mayer multiple’s move above 2.40 on Nov. 7, 2013. By Dec. 18, however, the price was trading at lows near $350.
So, if history is a guide, then the fear of missing out may kick in once the Mayer multiple finds acceptance above 2.40, leading to further price rise toward the record high of $20,000.
As of writing, bitcoin is trading at $12,521, representing 10 percent gains on a 24-hour basis. Meanwhile, the Mayer multiple is seen at 2.40.
The cryptocurrency has pulled back from 17-month highs hit earlier today, leaving signs of bullish exhaustion on the short duration chart.
Bitcoin created a doji candle with a long upper shadow earlier today. The doji candle – a sign of bull indecision or exhaustion – is backed by highest sell volume (marked by arrow) since June 6.
Such candles often mark a local top, according to Alex Kruger, a prominent fundamental and technical analyst.
As a result, a deeper pullback, possibly to the psychological support of $11,000 cannot be ruled out – more so, as a widely followed long-term indicator is reporting extreme overbought conditions.
The 14-week relative strength index (RSI) is currently hovering above 81.00, the highest level since mid-December 2017.
While the case for a minor pullback is looking strong, the overall outlook will remain bullish as long as the price is held above the May 31 high of $9,097 and the cryptocurrency could chart another meteoric rise toward $20,000 if the Mayer multiple rises above 2.40.
Bitcoin’s ongoing bull run has juiced demand for new mining equipment, putting pressure on manufacturers to produce enough machines to satiate buyers.
The world’s largest cryptocurrency by market cap is currently trading at above $11,000 after it surpassed the $10,000 level over the weekend – a nearly 200 percent jump since February.
“The surge in bitcoin resulted in increased demand and supplies were already short,” said Steven Mosher, head of global sales and marketing at Canaan Creative, maker of the Avalon miner.
While he declined to disclose the firm’s order volume, Mosher said in an email that “the current state of the industry is that inventories are down and demand is high.”
He told CoinDesk:
“It looks like a return to the 2017 Q3, Q4 conditions, where demand was three times the supply.”
Back then, bitcoin’s price had doubled from July to September in 2017 and further jumped by four times in the last quarter, reaching almost $20,000.
The price increase over the past several months also led to a significant drop of the time it takes for new mining equipment to pay for itself, according to data provided by TokenInsight, a crypto startup that focuses on mining and trading research.
The firm estimates the average payback period for most mining equipment in the second quarter has dropped to 60 to 150 days, a notable decrease from the previous range of 120 to 280 days.
To capture the new opportunities, Canaan launched a new mining model last month, the AvalonMiner 1041, which it claims can compute as much as 37 terahashes per second (TH/s) with electricity consumption at 2,361 watts per hour.
By comparison, an older model, the Avalon 851, performs its calculations at a speed of around 14.5Th/s, consuming 1450 watts an hour.
Mosher added that pre-orders for such models are already queued up to as late as October delivery, due to the bulk of buying interest coming from larger customers.
Similarly, crypto mining giant Bitmain rolled out for sale improved versions of its AntMiner S9 model, dubbed AntMiner S9 SE and S9k just last week. Shipment of the first batch won’t be scheduled until August, according to the firm’s website.
Even more expensive and powerful products, such as the WhatsMiner M20, launched by ex-Bitmain chip design director Zuoxing Yang, are seeing an increasing level of buying interest.
Yang told CoinDesk that the next batch of M20s, which are scheduled for shipment as late as October, is “almost sold out” at the moment.
But Yang added another important reason why the industry’s supply is having difficulty catching up with the demand is production capacity due to the limited supply of chips from various vendors to begin with.
“Bitcoin’s hash rate increase just can’t keep up with the pace of the price jump,” Yang said. “Production capacity is the bottleneck.”
Hash rate boost
Indeed, the resurgence of mining interest is also reflected in the overall amount of computing power devoted to securing the bitcoin network, which recently hit an all-time high.
Based on data from mining pool , the latest one day and seven-day average hash rates are at 65 million TH/s and 58 million TH/s, respectively.
This aggregated computing power has jumped by about 80 percent since late last year when the 14-day average bitcoin mining hash rate dropped to as low as 36 million TH/s amid bitcoin’s price decline.
Assuming all such additional computing power has come from more widely used mining models like the AntMiner S9 or Avalon 851 with an average hashing power of about 14 TH/s, that would translate to roughly 2 million mining units having been switched on over the past few months.
As a result, mining difficulty – a measure of how hard it is to solve the math problems that earn new coins – will further increase by six percent at the beginning of the next adjustment cycle to an all-time-high level above 7.8 trillion. estimates that bitcoin
Given how slowly Washington lawmakers have taken to devise a coherent, informed view of cryptocurrency, the Chair of the House Financial Services Committee’s rapid leap to action last week over Facebook’s ambitious Libra project was remarkably fast.
But let’s reflect not on the details of Rep. Maxine Waters’ (D-Calif.) urgent requests that Facebook to cease work on Libra until after hearings are held or on how European lawmakers made similar appeals. The important takeaway from these legislators’ actions is that they are able to make such demands at all. since this is not the case with truly decentralized projects.
Unlike with bitcoin, representatives in Congress can directly identify and talk to the people in charge of the Libra project. They can subpoena them and, thus, pressure them. They might start with David Marcus, head of Facebook subsidiary Calibra, but, ultimately, it’s Facebook CEO Mark Zuckerberg who’ll give lawmakers the greatest leverage.
In this case, the buck stops with Zuck.
Now, imagine a Congressional leader calling for a halt in bitcoin development. Who exactly are they going to pressure to end an open-source project involving millions of globally spread mostly unidentifiable developers, miners and users?
This distinction – between one project with a single, identifiable authority figure and another whose governance is distributed and leaderless with a founder who has never revealed their identity – goes to the heart of a crypto community critique that the social media giant’s initiative is not censorship resistant.
When there’s someone in charge, an interested party – a policymaker, a banker, a regulator, a shareholder – can lean on them to make changes. And when the blockchain consensus model is based on a club-like permissioned membership, a coordinated effort to alter, or censor, the ledger is always possible. And if the ledger or its software can be altered by this pressure, the Libra platform can’t unconditionally promise to support open, unfettered access for users and a permissionless innovation environment for developers.
Let’s be clear: Libra’s designers have thought deeply about how to protect their project from Facebook itself, both in a real sense and that of public perception. In its commitment to decentralization, the team has put the code under an open-source license, handed the network’s governance authority to a separate Swiss-based foundation, brought in 27 external partners to work alongside Facebook as independent, permissioned nodes in the network, and verbally committed to transition to a permissionless model over time. There is a structure and roadmap in place for Libra to grow and survive regardless of its genesis as a Facebook project.
All that’s fine. But we’re still at the genesis phase, one that is and will for some time hinge on the centrality of a particularly powerful company.
The culture problem
At the risk of stating the obvious, Marcus and his team are paid by Facebook. Follow the money, as they say. But also, follow the code.
The Libra protocol’s all-important source code is now open-sourced, but it was conceived and gestated inside Facebook. So, whether the project managers and programmers resist or not, the culture of that organization will inherently feed into Libra’s design priorities.
The elephant in the room is that a drumbeat of recent news has revealed Facebook’s corporate culture to be profoundly toxic. The company’s model of surveillance capitalism has turned users into pawns in a global game of data manipulation, cultivated echo chambers of narrow-mindedness, done irreparable harm to the worthy cause of journalism, and deeply undermined our democracy.
This legacy is the unavoidable reason why people, including lawmakers, are alarmed that Facebook might be on the verge of creating a new international model for money and payments. Rightly or wrongly, there’s a fox-in-the-henhouse optic here that’s unhelpful.
Wharton Professor Kevin Werbach argued in the New York Times this week that Facebook’s Libra is a bold effort to win back public trust by leveraging the accountability ingrained in blockchain technology. But at the project’s genesis phase, with no choice but to trust Facebook’s early input, that legacy of prior mistrust could easily become a huge barrier to its progress.
We should support Libra, not Facebook
Notwithstanding all the above, I actually want Libra to succeed. (Note: I also want Facebook to die. That’s not a contradiction; those two outcomes can and should be separate. In fact, it’s the nub of the issue.)
The Libra team has set its sights on achieving financial inclusion for the 2 billion adults worldwide who don’t have bank accounts. It’s a noble goal, and they are going about in an intelligent way – from a truly international, cross-border, cross-currency perspective. Bring all those people into the international economy and the payoffs could be huge, for them and for the rest of us.
And let’s face it, bitcoin has dismally failed to live up to its advocates’ promises of a financial inclusion solution. Bitcoin’s and other cryptocurrencies’ impact on the $800 billion global remittances market is puny.
Sure, uptake could rise if the off-chain Lightning Network lives up to its promise to enable larger-scale transaction-processing, if stablecoin projects resolve bitcoin’s volatility problem, and if new encryption solutions can improve both security and user experience with crypto wallets. But these solutions will take time. We need to act now.
In the end, it’s not at all clear that global person-to-person payments are a viable use case for bitcoin, perhaps because too many HODLing speculators crowd all the spenders out. And, of course, no other payments-focused cryptocurrency has put a big enough dent in the remittance market.
So, perhaps the recipe for a global broadening in payments lies with a cross-border, low-volatility international stablecoin backed by a basket of leading fiat currencies and developed with the formidable programming and marketing resources of 28 tech and financial giants. Also, when you combine Facebook’s, Instagram’s and WhatsApp’s user count, the number of potential wallets runs to 4 billion. Global network effects. Instantly.
All other things being equal – that is, if we ignore, for now, the genesis problem of Libra inheriting Facebook’s toxic roots – one could also argue that a permissioned, corporate network is the best approach for the Libra blockchain in place of a fully open, permissionless chain such as bitcoin’s or ethereum’s. The heavy lifting needed for early global traction – the software development, the marketing effort and the public policy outreach – requires that significant corporate resources be deployed in a targeted, coordinated manner that’s hard for open-source blockchain communities to achieve. There are efficiency advantages to be had from centralization.
Over time, as the project grows, Libra hopes to expand the consortium. That could undermine the coordination efficiency, but in a classic centralization-versus-decentralization tradeoff, the addition of new members – more NGOs, some banks, a workers union perhaps, and some public pension funds – will achieve greater diversity and lower collusion capacity. It’s far from perfect but the timed transition brings things closer to censorship resistance at a time in the future when it will matter — if it they get there.
What this means for bitcoin and crypto
As an aside, I also believe Libra’s success would be a positive for bitcoin – and the past week’s price action suggests that the market sees the same.
Here’s why: Currently the one value proposition that holds well for bitcoin is that it will be a more liquid, digitally up-to-date risk-hedging vehicle than gold when people need to preserve value in something immune from political and institutional risk. That argument could be enhanced if Libra succeeds in converting billions of people to digital payment wallets, because it will more broadly establish the power of blockchain-based digital money as the way of the future. At the same time, because of its genesis as a Facebook-initiated, permissioned system, Libra will not shake the perception of being prone to political – i.e. censorship – risks. For many, then, Bitcoin, aka digital gold, will become the obvious alternative.
The currency-basket-backed Libra token is, however, a real competitor to other reserve-backed crypto-tokens, such as USDC, issued by the CENTER coalition initially formed by Circle and Coinbase, GUSD, Gemini’s stablecoin, and PAX, from Paxos.
But we can imagine events working in the latter’s favor. Developing countries like India, for example, may become hostile to a new currency entering circulation that sucks demand away from their local currencies, but they would be more accepting of a digital dollar, given that the greenback already circulates in their economies. Users, also, might be happier holding tokens pegged to single sovereign currencies rather than in a hard-to-measure basket. And if concerns about centralized control undermines trust in Libra or limits innovation, the fact that these tokens are built on truly permissionless blockchains may make them more appealing (even if you still have to trust the reserve-holder to guarantee to the price stability.)
Whatever happens, the world of money flows is mind-blowingly huge. There are $6 trillion a day in foreign exchange transactions alone. That allows plenty of room for different models, different tastes, and different trust systems for coordinating digital value exchange.
Getting our priorities straight
The bigger risk is not that Libra succeeds and enriches Mark Zuckerberg even more but that neither Libra nor one of its crypto competitors ever succeeds in breaking down the barriers to economic participation. Financial exclusion breeds poverty, which in turn breeds terrorism and war.
And if we assume that the technology, if it isn’t yet ready, will ultimately get there, then the biggest threat to that is from a policy mistake.
The subtext of both Waters’ statements and those of European lawmakers was that this private exchange system can’t be allowed to replace national currencies. Thats’ not what Libra intends, but the perception that it is undermining nation states’ sovereignty over money could stoke fears and lead to a ban on Libra. And if that happens, it sets an ugly precedent for or all other competing ideas, whether it’s USDC, GUSD, PAX or DAI or something else.
The projects capacity to foster financial inclusion could also be hurt by the Financial Action Task Force’s, or FATF, embrace of a new rule for exchanging cryptocurrency. If ratified by enough countries that could curtail the free flow of cryptocurrency among addresses that haven’t been through a bank-like “know your customer” process. In other words, it could pose a real barrier to Libra’s and everyone else’s dream of financial inclusion for the “unbanked.”
The bottom line: the Libra team has its work cut out, and we all have a lot riding on it. The project’s representatives must face the reality that, for now at least, the buck still stops with Zuck, and that regulators will use that against them.
We should all wish them success in trying to convince policymakers that an open-system to global financial transactions is important. (It’s encouraging that the Bank of England is taking an open-minded view, proposing that tech companies like Libra be allowed to access funds directly from central banks.)
But, by the same token, we must be vigilant against corporate power that could easily convert this important project into something more sinister. Facebook’s own history is a reminder of the risks we face.
I wish it were a different company running with this ball right now. But since it’s not, the need for all of us to take a direct interest in this project is even greater.
We must demand that our representatives provide clear-headed, informed oversight that holds corporations like this to account and curtails their monopolizing powers. But we should also expect smart, open-minded regulation that encourages companies to compete and innovate in an open system that creates opportunities for everyone on this planet.
Bitcoin has broken yet another 2019 record, reaching as high as $11,304, before conceding a short-term period of profit taking.
At 21:00 UTC on June 23, the world’s largest cryptocurrency by market capitalization shot upwards on the daily chart, cementing a new high beyond June 22’s peak of $11,215.
The move to another 2019 high comes after bitcoin’s price dropped to as low as $10,416 on June 23 before another surge of buying pressure pushed prices back above $10,750 within the same day.
From then BTC bolstered 6 percent, rising above $11,000 at around 19:00 UTC on Sunday evening and then reaching over $11,300 two hours later. It’s currently changing hands at $10,768 as per CoinDesk’s price data.
BTC’s 2019 bull run has already started off with a bang in recent weeks, a likely a combination of traders buying into their own fear-of-missing-out (FOMO) as well as institutions chasing the tail end announcement of Facebook’s project Libra.
However, large levels of volume failed to accompany the rally, beginning at 97.6 billion traded over a 24-hour period and continued to decrease to as low as 67.5 billion by days end, meaning that the move was unsupported and a small sell-off from that point out, was definite.
Its “Real 10” volume – a metric that takes into account trading volume from exchanges reporting honest volume figures as identified in a report by Bitwise Asset Management – currently stands at $46.17 billion, a large difference, according to.
Meanwhile, the rest of the market remains relatively flat today, with but a few in the top 20 posting gains. Cadano (ADA) and UNUS SED LEO (LEO) are the only two in the green within the top 20 at CoinMarketCap and are both posting 0.4-2.4 percent growth, respectively, over a 24-hour period.
In addition, the total market capitalization rose to a high of $331.8 billion, its highest point since July 31, 2018, while the market capitalization for altcoins is down $3.8 billion over a 24-hour period pointing to a preference in holding BTC above all else amongst the trading elite.
- Bitcoin’s price has recovered 40 percent of the bear market drop. The breakout has bolstered the bullish setup on the weekly chart, which is currently reporting the strongest buying pressure in six months. As a result, BTC looks set to break above the psychological resistance of $10,000.
- The price has already rallied nearly 130 percent so far this quarter. Hence, a temporary correction due to bull exhaustion cannot be ruled out.
- The outlook, however, will remain bullish as long the price is held above recent lows near $7,500.
Bitcoin’s (BTC) price has erased 40 percent of the sell-off seen in the twelve months to December 2018 and looks set to rise above $10,000.
The leading cryptocurrency by market value rose above $9,740 on Bitstamp earlier today, retracing more than 40 percent of the drop from the record high of $19,666 reached in December 2017 to the low of $3,122 hit in December 2018. The global average price, as calculated by CoinMarketCap, is just $150 away from achieving that milestone.
As of writing, BTC is changing hands at $9,840 on Bitstamp – the highest level since May 2018 – representing 31 percent gains from lows near $7,500 seen on June 10.
It is worth noting that bitcoin’s latest leg higher is a accompanied by a rally in gold prices. The yellow metal has risen from 1,320 to $1,411 over the last ten days.
The positive correlation between the two assets contradicts the divergent price action seen in the preceding seven months.
For instance, BTC fell from $6,200 to levels near $3,100 in four weeks to December 14, 2018. During the same time period, gold went from $1,200 to $1,300 and further extended the rally to $1,346 (Feb. 20 high). By early May, the yellow metal was down 6 percent from February highs, while bitcoin was up 76 percent from December lows.
The change from negative correlation to positive correlation, if sustained, could boost bitcoin’s appeal as digital gold. Many including the likes of Tyler Winklevoss, founder of Winklevoss Capital Management, already consider bitcoin as gold 2.0.
It remains to be seen if the two assets continue to move in the same direction in the near future. That said, technical charts indicate bitcoin is likely to extend its ongoing bullish run to levels above $10,000.
Bitcoin’s convincing move above the widely tracked 38.2 percent Fibonacci retracement hurdle of $9,442 has strengthened the bullish case put forward by the higher lows, higher highs pattern, ascending 5- and 10- week moving averages and Chaikin money flow index, which is currently reporting strongest buying pressure in six months with a reading of 0.35.
As a result, the cryptocurrency looks set to test the next major resistance range marked by the April 2018 high of $9,949 and the psychological resistance of $10,000.
A high-volume weekly close above $10,000 would expose the 50 percent Fibonacci retracement resistance of $11,394.
It is worth noting that the cryptocurrency is up nearly 140 percent on a quarter-to-date basis (from April 1’s opening price). The bulls usually take a breather following such stellar rallies.
So, a sudden correction cannot be ruled out. That said, the outlook would turn bearish only if the price violates the bullish higher lows pattern with a move below $7,500.