Yet another week of bitcoin testing $10,000 and we are back at trading around $9,600. Since the halving on May 11, the digital currency has been trading in narrow ranges.
Historically, the event has led to bitcoin rallies. Since halving, so far BTC/USD has gained just over 12% but the overall technical momentum was still negative as it had more down days than up days. Nicholas Pelecanos, head of trading at NEM Ventures said,
“Bitcoin is on a see-saw, between bulls and bears.”
“On one end, we have network data and technicals; the other, strong fundamentals and a correlation to U.S. stock indices.”
The bitcoin network data is flashing more bearish signals than bullish, as such, he is expecting further short-term selling.
Cryptocurrency exchanges are also seeing a huge inflow of BTC which could be with the intent to sell their coins.
On-chain data also indicates a change in behavior from miners and they are selling inventory but according to Adamant’s Tuur Demeester this is “bullish” because “healthy bitcoin miners are hodling, and struggling miners have little BTC left to sell.”
According to Miner Outflow Multiple, the ratio of miner outflow in USD and its 365 day MA, miners moving a large amount of bitcoin is currently near its all-time low.
The underlying fundamentals of bitcoin are healthy with mempool data back to its normal levels, transaction fees reverting to lower levels and the hashrate stabilizing at a reasonable level.
Major Chinese mining equipment makers, Bitmain and MicroBT have also been dispatching their most efficient ASIC miners; AntMiner S19 and WhatsMiner M30S. Miners have also been active users of the fast-growing borrow/lend crypto market.
Meanwhile, futures premiums continue to go up with CME traders still more bullish than the retail-focused platforms.
Bitcoin has barely scratched the surface
In the short term, bitcoin might still have to weather the bears but in the next six to twelve months investors are expected “to reap the rewards of post-halving price movements.” Lennard Neo, head of research at Stack Funds said,
“In reality, there is a significant time lag between the halving event and the establishment of renewed market equilibrium based on general supply and demand.”
Almost 4 weeks have passed since the Halving
Historically, it has taken Bitcoin many weeks for the Halving effect to translate into price
— Rekt Capital (@rektcapital) June 6, 2020
Besides the supply side affected after the halving and the times for miners to find their break-even point increased, investors are also banking on institutional demand.
Amidst the coronavirus pandemic, fund flows into crypto asset managers have been robust.
Grayscale is already consuming more Bitcoin than mined since halving. Since April, the firm has had its bitcoin investment funds ballooned to $3.5 billion as of June 2nd, up from $2 billion at the end of the first quarter. Michael Sonnenshein, managing director at Grayscale with $4 billion in cryptos assets under management said,
“There’s a lot of momentum and interest in investing in digital currencies particularly in the face of uncertainty, the pandemic, political tensions, and the amount of stimulus being pumped into the global economy.”
According to James Wo, chairman of Digital Finance Group, a $500 million crypto and blockchain fund, bitcoin is digital gold and as such, has barely scratched the surface. He said,
“Bitcoin has great potential to grow.”
“Gold has an eight trillion-dollar valuation, while bitcoin has less than $200 billion dollars in valuation. It just needs more time for mainstream adoption. People need enough time to fully understand and believe in it.”