Bitcoin and the aggregated cryptocurrency market is now facing some turbulence as bulls and bears strive for control.

This caused BTC to plunge as low as $11,150 overnight in a sharp selloff that ultimately was followed by a strong rebound.

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Although the benchmark digital asset is now consolidating within the mid-$11,000 region, it still appears to be at risk of seeing further downside.

One analyst is noting that a sustained decline could lead it as low as $9,000 in the near-term.

This possibility will only play out if bulls are unable to stop Bitcoin from breaking below $10,800.

BITCOIN CONSOLIDATES AS BULLS BUILD GREATER SUPPORT

At the time of writing, Bitcoin is trading up over 1% at its current price of $11,500.

Following the sharp selloff seen overnight, this is around where the cryptocurrency has been able to find some stability as its buyers attempt to push it back into the upper-$11,000 region.

It is important to note that this recent price action has done little to offer insight into the cryptocurrency’s macro trend, as it remains caught within a trading range between $11,200 and $12,000.One analyst noted that the lower-$11,000 region had been laced with massive buying pressure in recent days.

“Bitcoin daily chart — There is plenty of support to test here mid range as the price trades at/above the middle BB. Let the bands catch up and then make another move,” he said.

Image Courtesy of Big Cheds. Chart via TradingView.

HERE’S THE CRUCIAL SUPPORT THAT BULLS NEED TO DEFEND

Another analyst noted that $10,800 had become a major support level.

He also claims that the cryptocurrency’s reaction to this level in the near-term could have major implications for where it trends next.

A break below it could lead the cryptocurrency as low as $9,000.

“Bitcoin: Pink is HTF support. I’ll look for longs either on price getting back above black SR or at pink. Lose pink then we trade towards 9000.”

Image Courtesy of Tyler Durden. Chart via TradingView.

It appears that Bitcoin has now reached a pivotal point. Which direction it trends next could have major implications for its macro outlook.

New data from glassnode and Etherscan show Ethereum’s hashrate has risen to a 20-month high and this has led some optimistic traders to suggest Ether price will continue to rise to new highs in 2020.

The explosive increase in Ethereum’s hashrate appears to be heavily influenced by the rapidly growing Decentralized Finance (DeFi) sector and at the time of writing is hovers around 201,000,000 GH/s, a level not seen since 2018.

Ethereum network hashrate rises to 2018 levels. Source: Etherscan.io

In recent weeks, demand for Ether has increased noticeably and since mid-June, an increasing number of users started to utilize DeFi platforms, leading the Ethereum network to become clogged.

Consequently, transaction fees have started to approach record highs due to the sudden spike in transactions and heightened activities on DeFi platforms and Uniswap.

Is a higher hashrate good or bad for Ethereum?

The surging hashrate, Ether price, and rising fees signal that the user activity on the Ethereum blockchain is increasing. Although the momentum of Ethereum has primarily been fueled by DeFi, the data show the fundamentals of Ethereum have strengthened.

The hashrate of the Ethereum blockchain network has also been increasing because of rising miner revenues from fees. In periods of network congestion, users typically compete against one another by attaching a higher gas cost or transaction fee.

The competition in the market leads to higher fees at times, especially when the interest in DeFi is surging, causing miner revenues to rise. An increase in revenues would then compel more miners to mine on Ethereum, leading to an increase in the hashrate.

Researchers at Glassnode explained that miner revenue from Ethereum fees recently hit an all-time high at 18%. They said:

“Miner revenue from fees on Ethereum has skyrocketed in the past two months, reaching an all-time high of around 18% (30d moving average). Conversely, this has brought the Fee Ratio Multiple (FRM) to lows never seen before on Ethereum. Created by Teo Leibowitz , the Fee Ratio Multiple (FRM) is defined as the ratio between the total miner revenue and transaction fees. FRM indicates how secure a chain is once block rewards disappear.”

Miner revenue from fees and fee ratio multiple. Source: Glassnode

Ether fees outpace Bitcoin

In recent weeks, the craze around Uniswap and new DeFi protocols, such as Yam Finance, led fees on Ethereum to outpace Bitcoin. Cryptowat.ch, a market data provider owned by Kraken exchange said:

“On-chain transaction fees on Ethereum continue to outpace Bitcoin. The gap is now up to $1 million a day.”

On-chain fees on Ethereum surpass Bitcoin. Source: Cryptowat.ch

Some critics may justifiably argue that higher fees on the Ethereum network negatively affect users and complicate the user experience.

An alternate interpretation suggests that rising fees signal that user activity on the network is climbing and the hashrate is rising as a result. These are healthy signs as during the darkest days of the 2018 bear market many crypto investors criticized the lack of users on the Ethereum-based dapps.

Additionally, as long as Ethereum remains a proof-of-work (PoW) blockchain network, the hashrate serves as an important metric for blockchain security.

The previous all-time high was during the market peak of 2017 — $4.55 million. The recent surge in Ethereum fees suggests that users are willing to shell out higher amounts to get their transactions completed in a period of decentralized finance (DeFi) boom.

In comparison, Bitcoin transaction fees have remained low. They were $1.43 million in total yesterday, which is 4.8 times lower than Ethereum fees on the same day.

With BTC stuck between a rock and a hard place, investors have become indecisive as to what comes next. Nothing shows this as well as the funding rate of Bitcoin futures markets, which have trended towards 0.00%.

Yet data has shown that quietly, institutional traders have been building a notable Bitcoin short position.

INSTITUTIONS ARE BUILDING A BITCOIN SHORT POSITION VIA THE CME

According to data shared by crypto news aggregator “Unfolded,” data shows that institutional investors in Bitcoin are short-term bearish.

Unfolded shared the chart below on July 12th, which cites data from the Chicago Mercantile Exchange’s Bitcoin futures market. The CME BTC futures are arguably the foremost market for firms on Wall Street to get exposure to cryptocurrencies.

The data shows that accounts deemed “institutions” are cumulatively net short just over 2,000 contracts.

Just a week before Bitcoin fell from the $9,000s to $3,700, institutions had a net short of around 2,000 contracts. And prior to the crash of BTC after the launch of Bakkt, institutions also had a net short.

THEY’RE LONG-TERM BULLISH

Despite the short-term bearishness of institutional Bitcoin holders, data shows that they expect the cryptocurrency market to do well in the long run.

Take the example of Grayscale Investments’ Grayscale Bitcoin Trust. It is a publicly-traded investment fund that many see as the most accessible Bitcoin investment vehicle for Wall Street firms.

I found in June that over the course of the twelve weeks before my analysis, 62,973 Bitcoin had been added to the trust. This is important as over that same time frame, 125,388 coins were mined.This means that a single firm, buying BTC on behalf of its clients, accumulated half of all coins mined.

Released at the start of June, the survey revealed that many institutional investors see promise in Bitcoin and the crypto market.

“Digital assets are gaining in favorability and appeal amongst institutional investors, with almost 80% of investors surveyed finding something appealing about the asset class. In a comprehensive survey of almost 800 institutional investors across the U.S. and Europe, 36% of respondents say they are currently invested in digital assets, and 6 out of 10 believe digital assets have a place in their investment portfolio.”

As to why institutions are interested in crypto, Fidelity cited the uncorrelated nature, strong potential upside, and technological innovation of this asset class.

Two months after the network’s halving event, it’s harder than ever to mine bitcoin.

Bitcoin mining difficulty, a measure of how hard it is to compete for block rewards on the network, just set a new record high of 17.35 trillion around 12:00 UTC on Monday. This marks a 9.89% jump from the previous record of 15.78 trillion posted on July 1, Bitcoin.com’s blockchain explorer shows.

The new record comes a little over two months after bitcoin’s halving on May 11, which reduced the block subsidy from 12.5 bitcoin per block to the current 6.25 bitcoin, per the network’s design. The latest figure also surpasses the pre-halving high seen in early March.

The increase in difficulty reflects increasing computing power being applied to mining bitcoin. The record hashrate also seen Monday signals that investment in state-of-the-art mining machines continues to grow after the halving, even though the price of bitcoin has remained stuck in a range between $9,100 and $9,500 since early July.

Bitcoin mining difficulty is designed to adjust every 2016 blocks, roughly every 14 days, and is based on the hashing power competing for rewards on the network over the period. If more miners have plugged into the network in any one cycle, pushing the average 14-day hashrate up, difficulty will subsequently rise in the next cycle.

“The increase in the network difficulty during the rainy season in Sichuan has happened every year for a few years now,” said Dmitrii Ushakov, chief commercial officer at BitRiver, the largest bitcoin mining hosting provider in central Asia.

Ushakov said with the supply chain and business disruption resulting from the coronavirus pandemic completely resolved in China — estimated to have around 65% of Bitcoin’s mining power — “this has resulted in a surge in the number of miners that were shipped and delivered in the past two months and these miners are now online.”

But there’s another force driving the Bitcoin hashrate’s recent rebound. While many had expected prior to the halving that older-generation mining machines like Bitmain’s AntMiner S9 would soon be phased out as they became unprofitable to operate, the reality may be more complicated.

Jiang Zhuo’er, CEO of BTC.TOP, a bitcoin mining pool based in China that also operates bitcoin miners, said by turning these older-generation devices to a low-voltage mode, one could improve the profit margin to keep them up and running.

With a low average electricity cost of around $0.03 in China’s Southwestern region during the summer rainy season, a standard AntMiner S9 would be operating at loss with bitcoin’s current price and record high difficulty. But available firmware updates could be applied to bring down its electricity consumption to improve the overall profit margin by 20%, a process called “under-clocking.”

While 20% may seem a significant margin increase, in terms of the actual profit, an under-clocked AntMiner S9 can only generate an almost negligible profit of less than $0.5 in 24 hours, even at an electricity rate of $0.03.

Part of why many still choose to operate older models, even without much profit, may be due to a surplus of newly built mining facilities since last year. Typically, bitcoin mining farm operators in China’s Southwestern region would sign agreements with hydro-power plants for a certain amount of electricity over a specified period.

“So mining farms would lower down the offerings to below $0.03, even below $0.02 just so that they’d have enough machines to fill in the capacity,” said Jiang, or even some would just mine themselves because they must pay the agreed electricity to the power plants whether or not they could use up the said amount.

“Although it may look as if some old models are not profitable enough, in reality, they are not shutting down now,” he said. Still, Jiang expects these older machines to be phased out after the end of the rainy season in China (around October) but throughout the summer the hash rate won’t change too much if bitcoin’s price remains static.

“After that, the difficulty could go down because the hash rate coming from newly delivered, more powerful machines may not be able to offset the decline resulting from the shutdown of older-generation equipment like the S9,” he added.

However, the drop isn’t necessarily a price-bearish development and may instead indicate the distribution of bitcoin ownership is shifting.

As of Sunday, there were 103 addresses holding at least 10,000 BTC — the lowest since May 2019, according to blockchain analytics firm Glassnode. The number has declined by 8% over that 2.5-month period.

Ten thousand bitcoin is worth close to $93 million at press time.

Some may see the decline in the whale addresses as a sign of weaker buying pressure and anticipate a price drop as a result. However, Richard Rosenblum, co-founder, and co-head of trading at crypto liquidity provider GSR, suggests otherwise.

“It’s bearish to see the biggest holders reducing their stakes, but bullish to see the market becoming more decentralized,” Rosenblum told CoinDesk in a Telegram chat.

Market shift?

Validating Rosenblum’s comments is the growth seen in the number of lower-value bitcoin addresses over the past couple of months.

For instance, there were 2,155 addresses holding at least 1,000 coins on Sunday, up nearly 3% from a low of 2,097 observed in April.

Meanwhile, the number of addresses holding at least 1 BTC continues to reach new record highs. So do addresses holding 0.1 BTC and 0.01 BTC.

As such, one could argue bitcoin ownership is being transferred from relatively few whales to a large number of smaller investors.

“Over time, you would expect [bitcoin] to naturally dissipate to more hands,” said Rosenblum.

Data limits

Blockchains are transparent and allow every single transaction to be viewed and analyzed. Even so, drawing definite conclusions from metrics such as address growth can be challenging because a single user or an exchange can own multiple addresses.

“Whales may not be having all of their holdings in a single address and moving crypto for risk management purposes,” said Simon Peters, a crypto market analyst at investment platform eToro.

As such, an increase or decrease in the number of bitcoin addresses may not fully represent the entry or exit of investors.

Bitcoin is about to break out of its trading range, with buyers currently battling with sellers as it hovers just above $9,300.

The crypto has been trading here throughout the past several hours, and it remains unclear as to whether or not bulls have enough strength to catalyze a decisive move higher.

Despite the current indecision, some analysts are noting that Bitcoin will soon make a massive movement that offers significant insight into its mid-term outlook.

This movement may favor bears, as one pattern that is currently in play could soon mark a macro top for Bitcoin and the entire cryptocurrency market.

BITCOIN CONTINUES CONSOLIDATING AS ANALYSTS WATCH FOR A MASSIVE MOVEMENT

At the time of writing, Bitcoin is trading up marginally at its current price of $9,310. This is around where it has been trading throughout the past several days and weeks.

This is a significant level, as it marks the upper boundary of the trading range that it has been caught within for the past several weeks.

As of late, every attempt to move beyond this range has been met with an influx of selling pressure.

As Bitcoinist reported yesterday, investors may soon have a better idea of Bitcoin’s macro trend.

One analyst cited within the report explained that historical data suggests bouts of volatility this low are typically followed by $3,000+ movements.

BTC FORMS BEARISH H&S PATTERN; HERE’S HOW IT MAY BE CONFIRMED

Bitcoin is somewhat neutral at the present moment, but there is one pattern currently in play that may not bode well for the cryptocurrency’s buyers.

One analyst pointed to a head and shoulders pattern that has been forming, noting that a rejection at $9,850 would confirm its validity.

“Haven’t been posting much on twitter lately, but I’ve been busy trading highly volatile alts. I barely look at the BTC chart, but given how the alt charts are looking, I could see a pop on Bitcoin to $9850, which might be the short for the whole market.”

If this pattern turns out to be valid, it could set the tone for how Bitcoin trends in the months ahead.

Bitcoin educator Andreas Antonopoulos says he would like to see more privacy features on Bitcoin, but they’re unlikely to happen anytime soon.

In a livestream Q&A on Antonopoulos’ YouTube channel on July 7, he said Bitcoin (BTC) was unlikely to ever implement privacy features similar to those used by Monero (XMR).

Antonopoulos said creating such features on a cryptocurrency like BTC “would create an enormous amount of controversy.” In addition, he said the structure of Bitcoin simply doesn’t allow ring signatures and stealth addresses.

“I think what we’re going to see soon is Schnorr, Taproot, and Tapscript, which open the door to a lot of improvements,” Antonopoulos said, “But they still do not involve zero-knowledge proofs or the types of ring signatures and stealth addresses that are done in Monero. Bitcoin is not a privacy coin.”

Bitcoin privacy features effective?

The features to which Antonopoulos is referring — Schnorr, Taproot, and Tapscript (a scripting update to Taproot) — have been cited by others in the crypto community as having the potential to make Bitcoin more private.

The director of research at blockchain firm Blockstream Andrew Poelstra has referred to Taproot as a system which could possibly render any transaction mostly indistinguishable from one another on the BTC blockchain. However, he noted that “transaction amounts and the transaction graph are still exposed, which are much harder problems to address.”

Multisignature schemes (MuSigs) from Schnorr are another possibility. Poelstra said using this method doesn’t reveal the original set of signers, or even provide the number of signers for MuSig transactions.

Bitcoin can be better thought of as pseudonymous rather than fully anonymous, as many transactions on the BTC blockchain can still be traced even with these privacy improvements.

IOHK, Cardano’s development company, says Coinbase will allow holders of the cryptocurrency ADA to stake their coins through Coinbase Custody.

At Cardano’s 2020 Virtual Summit, IOHK said the partnership would allow ADA holders to stake their coins in a safe and secure manner through Coinbase’s institutional storage offering.

“As of Q4 this year, ada holders will be able to store their assets in Coinbase Custody’s institutional-grade, battle-tested cold storage, whilst also maintaining the ability to delegate their stake.”

Cardano is currently in the process of upgrading to a proof-of-stake (PoS) model. The PoS consensus mechanism allows participants to lock up their coins or their stake. The blockchain protocol gives the right to validate the next block at random and in proportion to the number of coins stored by a participant. The more coins are staked, the higher chances of being chosen to validate the next block.

Staking allows users who wouldn’t normally be able to mine to contribute to the network in a relatively easy manner while receiving rewards.

Despite the adoption on Coinbase Custody, the leading crypto exchanges Coinbase and Coinbase Pro do not support ADA.

Recently, Coinbase revealed a list of 18 coins that were being considered to be added to their exchanges. ADA was not among the coins listed. COMP, an ERC-20 token that governs the Compound protocol, is the only coin from this list to be added so far.

XRP/USD:
Support: $0.175, $0.171, $0.157.
Resistance: $0.195, $0.20, $0.21.
XRP/BTC:
Support: 1950 SAT, 1900 SAT, 1890 SAT.
Resistance: 2050 SAT, 2100 SAT, 2200 SAT.

XRP/USD: XRP Bulls Finally Wake Up

XRP fell beneath a descending triangle pattern toward the end of June 2020. After breaking below, it headed lower until finding support at $0.175 (.5 Fib Retracement level).

The bulls defended this level over the past ten days, preventing the price of XRP from heading lower. This allowed the buyers to push higher from there today as XRP reached $0.186.

XRP-USD Short Term Price Prediction

Looking ahead, if the buyers continue to climb, resistance is expected at $0.195 (100-day EMA) and $0.20. Above $0.2, added resistance is found at $0.21 (200-day EMA).

On the other side, the first level of support is found at $0.175 (.5 Fib Retracement). Beneath this, added support is located at $0.171 and $0.157 (.618 Fib Retracement).

The RSI recently pushed higher to break above the 50 line. This indicates that the selling momentum has faded and that the buyers have taken control of the market momentum.

XRP/BTC: XRP Bounces Above 2000 SAT

Against Bitcoin, XRP dropped as low as 1900 SAT by the start of July 2020. From there, XRP reversed and started to grind higher slowly. In recent days, it found resistance at the 1950 SAT level but managed to break above it today as it reached above 2000 SAT.

The rebound from 1900 SAT prevented XRP from entering into an extended bearish trend against BTC. However, XRP is still in dangerous territory. The coin needs to rise and break above 2250 SAT to confirm the start of a recovery for XRP.

XRP-BTC Short Term Price Prediction

If the bulls push higher, resistance is expected at 2050 SAT, 2100 SAT, and 2200 SAT.

On the other side, the first level of support lies at 1950 SAT. Beneath this, added support is found at 1900 SAT, 1890 SAT, and 1850 SAT.

The RSI also recently pushed higher above the 50 line to indicate bullish momentum within the market.