We had 60, but quickly slipped through our hands
There are moments when you think the bull run gets another push of momentum while there are moments when you think the bull run has ceased to push further. These unpredictable moments seem to persist for the past few weeks as we continue to fluctuate between the $50k and $60k price levels for bitcoin. And in fact, we have just been able to breakout past the $60k but only to see that coming crashing down again towards the $50k level. What can we say…welcome to crypto!
Perhaps the biggest news just recently is the announcement of India’s intent on “banning” crypto across all types of services. Bearish news for sure, which also could have been the factor for the recent drop, but with all announcements of “banning crypto” we have seen over the past few years by governments, it is very hard to ban crypto. It is very hard to ban bitcoin. A technology that breathes decentralization at almost every aspect makes it extremely hard to monitor and ban bitcoin. With the internet, participating in the bitcoin network makes it very simple. And with host of startups focused on using bitcoin through other means besides the internet, via satellite, being able to use bitcoin in virtually any kind of remote environment is becoming more and more of a reality. What governments can drop the hammer on are on local exchanges. Third parties one may say. But there is a reason why many in the crypto community stress the proverbial “not your keys, not your crypto”.
And that is a reason why we are seeking a huge outflow of bitcoin off of exchanges over the past year. It has never been an easier time of keeping control of your own bitcoins through self-custody. Hardware wallets and cold wallets are flooding the markets right now with easy-to-use features that make self-custody a breeze. The drop in the amount of bitcoins on the major exchanges comes close to a drop of around 20% since last year. And that metric is only considering the bitcoins on the major exchanges. Traders and HODLers have learned the lessons of exchange hacks by taking their bitcoins off exchanges. But exchange features such as leveraged trading and option trading still make exchanges a great avenue for trading which is probably more geared to using stable coins as the base trading currency.
Hashrates on the bitcoin network continue to rise at an unprecedented level hitting over 160 EH/s based on recent readings of hashrate data. Mining continues to be profitable for all miners across the board. Despite mining machine orders continuing to be on the backlog, new miners still find ways of utilizing older mining rigs to start hashing on the network while they wait for new machinery to be delivered. And according to Canaan Creative, the China-based company said that presales of mining machines to the North American market have reached about 120,000 units, up 17% from mid-February, according to a Global Times report.
Despite rising prices of bitcoin and of mining rigs, the demand is still there leading to the belief that miners, especially institutional miners believe in a further rise in the price going forwards. Even Foundry Digital, a subsidiary of Digital Currency Group, has announced that it will look for institutional clients for bitcoin mining participation. This not only will further increase the hashrate, but will also offer a new option of North American investment into bitcoin mining. Although the narrative of mining wars between the West vs. the East does make for great headlines and investment thesis, the real war is on energy sources as bitcoin mining continues to harbor new innovative renewable energy sources.
One new metric to teach our community is the Liveliness metric. In short, the definition provided by Glassnode states that:
“Liveliness is defined as the ratio of the sum of Coin Days Destroyed and the sum of all coin days ever created. Liveliness increases as long term holder liquidate positions and decreases while they accumulate to HODL.”
So as long-term holders start to sell, their coins become more “lively” on the network with transactions and usage increasing as results. Now for the most part, in the past three years, we have seen this metric hover between the .59 and .61 ratio. But recent data shows a new high of around .618 indicating that many holders are pressured to take profit as prices may seem very high at the moment. Although this is not a sign that the top is near, it is a sign that perhaps many newcomers that came in during December of 2020, which marks the beginning of the bull run, sees current levels as an attractive level to sell, with the intent of avoiding further losses.
WRAP UP
On March 12, Michael Saylor has announced that MicroStrategy has bought another 362 bitcoins worth nearly $15 million. This seems to be a continuing trend for the public company, which seems to be the beacon for all public companies out there in putting their company’s reserve assets into bitcoin. More and more companies continue to do so as institutions continue to see the merit in bitcoin as a safe haven asset. But now that we have these institutions coming in to buy bitcoin, do we see central banks next as the last players coming in? And the question can then be phrased as, do we want central banks coming into bitcoin? As we know, central banks used gold in their reserves to back fiat currency decades ago before cutting off that link. Central banks holding bitcoins can be a dangerous option if they manage to own a significant amount of it.
In tune with the discussion above, recently Binance has been investigated by the Commodity Futures Trading Commission (CFTC) over concerns that US citizens used trading services on their platform which should be banned from all US citizens, according to a Bloomberg report. Using exchanges can be risky, on the trading level and even on the legal level. You never know when a regulator can come in and freeze all crypto accounts on an exchange. It’s happened before. So please be careful and continue to HODL!
About Valarhash
Chengdu-based Valarhash integrates mining machine sales, miner hosting, mining pool, and mine construction services. Led by CEO Fiona Lv, Valarhash aims to provide users with transparent and beneficial mining plans using advanced technology, with lower barriers of entry. Business operations cover hardware research and development, digital asset transactions and 1TMine hash power contract sharing. With a leading position in the hash power market, Valarhash integrates frontier resources with global vision, providing crypto compute service (CCS) and linking physical and digital worlds with blockchain technology.
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