We concluded last week based on our analysis of the Long/Short Position Ratio that Bitcoin would see a significant price adjustment. Our prediction stood correct but the range of price drop was still greater than expected. Let’s take a look at this week’s market.
Daily trading volumes
The daily trading volume went down from 350,000 to 300,000, making a 14% decrease. However, this figure is still better than that of last year around the same time, which was a decrease of 20%. This suggests that we might see a temporary bounce of the price of Bitcoin in the short run.
The daily trading volume has been on a slow increase since February 2018. It shows the core value of Bitcoin and is the fundamental support for Bitcoin price.
Daily Average Hashrate
We saw a decrease of the hashrate for Bitcoin compared to that in last week. The 7-day average hashrate for Bitcoin is 90EH/s. The 3-day average figure is 88EH/s. As the top product of its kind, the bottom price of Bitcoin is highly correlated to the “shut down price” for most mining rigs. Does this mean that the price of Bitcoin has hit rock bottom?
Let’s take a look at statistics by f2pool. Based on the current difficulty of Bitcoin mining and the rate of electricity at 0.35 yuan, two of the well-known mining rigs — Whatsminer M3 and Avalon A741 have reached their shutdown price. As for other major mining rigs, their shutdown prices have risen compared to those last year. Therefore, the price of Bitcoin is definitely not at the bottom yet.
How to calculate the shutdown price for mining rigs?
Shutdown Price = (electricity rate * power dissipation / 1000 + hourly mining reward * 2%) / hourly mining reward
Hourly mining reward = (effective hashrate / hashrate) * (block reward + block transaction fee) * 6
Filbfilb, a popular analyst on Tradingview, predicted that the shutdown price of this round is US$7531.94, US$6352.77 and US$3172 based on the analysis of candlestick chart. We are close to the first shutdown price.
Active & New Addresses
Active Addresses refer to the number of unique “from” or “to” addresses used per day. New Addresses refer to the number of addresses used for first-time transaction per day. We saw an sharp decrease in the two figures last week.
USDT saw some increase last week but the overall transaction volume maintained low. This indicates that there was some fund in the field for bottom fishing, but it did not help with the market much. According the latest news, Tether will move another US$19.997 million USDT to Ethereum.
Google Search Trend
Looking at the past-30 day Google search trend for “Bitcoin” and related terms, we found that the global search for “btc” has reached a record low.
Fear & Greed Index (FGI)
FGI was at 27, meaning that the market continues to show fear sentiments.
Long/Short Position Ratio
The long/short position ratio has finally dropped below one.
Having a “long” position in security means that you own the security. Investors maintain “long” security positions in the expectation that the stock will rise in value in the future. The opposite of a “long” position is a “short” position. A “short” position is generally the sale of a stock you do not own. Investors who sell short believe the price of the stock will decrease in value. In the market of contracts, the total positions of long and short are equal. For each long position, there is a short position. If the long/short position ratio is high, then it means that there are fewer people who go long than those go short. According to past experience, if the ratio is too high it is highly likely that we will see a market correction.
In sum, all the fundamental indexes have not shown signs of recovery. But the daily trading volume — a core indicator for Bitcoin price analysis — has not dropped beyond expectation, suggesting that we might see a temporary recovery of Bitcoin price. Judging from other long-term indexes such as hashrate, Bitcoin has not reached its bottom price. Bitcoin may hit a record low after the re-bounce. Investors need to be careful if they want to bottom fish. Bitcoin’s halving next year will bring a bright future for Bitcoin, but that future comes with the overcoming of obstacles. We suggest that you hold your position and don’t rush to buy at the bottom.
For the details of Bitcoin trading on LinkCoin, please contact Managing Director: Leon Tang, email@example.com