Virtual Blockchain Week Is A Virus-Proof Crypto Conference

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Simple Factors Show Bitcoin’s Hash Rate Will Continue Dropping; Here’s Why This is Bullish

Bitcoin’s recent volatility did some severe technical damage to its market structure, and also led to mass capitulation amongst BTC miners, with the crypto’s decline from $10,500 to lows of $3,800 making it no longer profitable for many smaller mining operations.

Miner’s ongoing capitulation is illustrated while looking towards Bitcoin’s hash rate, which has seen a significant decline over the past three weeks.

The decline may be far from over, as a few simple factors seem to suggest that more miners may capitulate in the near-term.

Bulls, however, may be pleased to learn that there’s a strong chance that this decline in hash rate may ultimately be a positive thing for Bitcoin’s price, with the capitulation of smaller miners potentially alleviating some of the selling pressure on the crypto.

Bitcoin’s Hash Rate Continues Dropping: Down 20% From All-Time Highs

Bitcoin’s hash rate – which represents the terahashes per second (TH/s) that are performed by the BTC blockchain – is often looked upon as an indicator of the cryptocurrency’s fundamental network strength.

Its hash rate has declined significantly over the past few weeks in tandem with Bitcoin’s price, plummeting from its all-time high of roughly 125 million TH/s in early-March to its current levels at roughly 100 million TH/s – a 20% drop.

Bitcoin

Image Courtesy of Blockchain.com

This plunge has come about as BTC shows signs of technical weakness, with its recent selloff leading many smaller miners to shut off their rigs due to being unprofitable.

Here’s Why a Declining Hash Rate May be Bullish for BTC

Although some see a declining hash rate as being emblematic of underlying network weakness, it may actually be a sign that Bitcoin is poised to see a notable rally in the near-term.

Miners offer the crypto markets with a steady stream of selling pressure, selling their earned BTC for fiat currency in order to fund their operations.

This is particularly true when it comes to smaller mining operations, as the large ones are able to operate at unprofitable levels due to having massive reserves of capital.

When Bitcoin’s price declines so sharply that it is no longer profitable to mine, many smaller operations temporarily wind down their rigs, while the larger operations hold their acquired BTC in hopes of selling it for a profit at more favorable prices.

That being said, a declining hash rate may signal that Bitcoin is about to see the stream of selling pressure provided by miners wane, giving the benchmark crypto significant room to rally.

This number will likely further decline in the near-term as well, the crypto’s upcoming mining rewards halving and current technical weakness may make mining BTC even more unprofitable.

Featured image from Shutterstock.

Venezuelan Petro Price Swings Wildly Off Peg, as Oil Price Plummets

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Venezuelan Petro Price Swings Wildly Off Peg, as Oil Price Plummets

venezuelan-petro-price-swings-wildly-off-peg-as-oil-price-plummets

The supposedly crude oil-backed Venezuelan Petro (PTR) cryptocurrency is retaining a value of almost $59 according to the official government calculator, diverging far from the current market price of about $27.70. The Petro is meant to represent the value of one barrel of crude oil.

Screenshot from 2020-03-31 14-18-03.pngSource: https://www.petro.gob.ve/calculadora.html

Crude oil prices have recently collapsed from a double hit: both from the economic impacts of the  COVID-19 pandemic, and from a raging price war between Saudi Arabia and Russia. The price of a barrel of crude recently dropped below $22 for the first time in nearly twenty years.

nearly 20 yearsUSDBRO chart by TradingView

This stark divergence of figures begs the question of how Venezuelan oil is valued. As CryptoGlobe recently reported, Venezuelan president Nicolas Maduro has claimed that the Petro is backed by between five and 30 million barrels of oil. Reuters recently reported that the Venezuelan government actually possessed 39 million barrels of oil.

But in fact, the status of Venezuela’s oil industry has recently become unclear, after a recent (February 2020) New York Times piece reported that “a stealth privatization is taking place” in the potentially oil-rich country. The sole state-owned oil company, PDVSA, set up in 2007, has always had a low production capacity compared to international standards, and in recent years American-sponsored sanctions have crippled what was left of Venezuela’s oil industry.

At any rate, the Maduro government has been largely unsuccessful in finding buyers or markets for the Petro cryptocurrency, after the U.S. outlawed its citizens from trading it. It is nearly impossible to find the token for sale on any cryptocurrency exchange, and thus, nearly impossible to define a market price.

Featured Image Credit: Photo via Pixabay.com

Binance Futures Hosts Trading Competition With Prize Pool Worth $1M

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BMW Set to Leverage Blockchain Technology Solution for Supply Chain Management

BMW Set to Leverage Blockchain Technology Solution for Supply Chain Management

Major car manufacturer BMW has announced the planned roll-out of its blockchain-powered Supply Chain Management (SCM) solution. For starters, the German automobile heavyweight will leverage the solution with 10 of its suppliers beginning in 2020.

BMW to Adopt Blockchain for SCM and Traceability

BMW Group, the parent company of BMW announced the news of the supply chain solution roll-out via a press release issued on Tuesday (March 31, 2020). According to the press statement, the German automobile behemoth will launch its blockchain-based solution dubbed “PartChain” with 10 of its suppliers in 2020.

The group initially tested a beta version of the solution aimed at optimizing the traceability of automobile parts and essential raw material relevant to complex international supply chains.

Since its test days in 2019, the PartChain project has grown to include an industry-wide solution for secure data sharing by leveraging both blockchain and cloud technologies, per the announcement.

Andreas Wendt, a member of BMW AG’s Board of Management which is a subsidiary tasked with managing the Group’s purchasing and supplier networks, pointed out that 10 major suppliers have been chosen for the roll-out in 2020 with more suppliers to be added in coming years.

Regarding the blockchain solution itself, Wendt remarked:

“PartChain enables tamper-proof and consistently verifiable collection and transaction of data in our supply chain. This move is designed to take the digitalization of purchasing at the BMW Group to the next level. Our vision is to create an open platform that will allow data within supply chains to be exchanged and shared safely and anonymized across the industry.”

According to the press statement, PartChain leverages Cloud technologies from Amazon Web Services and Microsoft Azure as well as DLT to ensure the tracking of components between members of the supply chain. The solution also provides a minimal risk of data manipulation.

Blockchain Utilization in the Automobile Industry

In 2018, the BMW Group co-founded the Mobility Open Blockchain Initiative (MOBI) alongside other major car manufacturers such as IBM and Ford, to explore the power of blockchain to consolidating industry efforts geared towards solving supply chain issues. Wendt also expressed the groups intent to share the PartChain solution with members of the MOBI initiative.

Similarly, automobile giant Mercedes-Benz announced the launch of its pilot test back in February 2020. As reported by BTCManager, the company aimed at leveraging blockchain technology to track CO2 emissions across its cobalt supply chain.

Also, HashCash Consultant revealed a partnership with a consortium of car manufacturers back in November 2019. The partnership reportedly aimed at building a DLT-based platform designed to track minerals needed for battery construction.

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In a Few Hours, a Crucial Bitcoin Candle Will Close: What To Watch For

In just over 120 minutes as of the time of this article’s publishing, Bitcoin’s one-month and three-month candles will close. A number of analysts have remarked that the upcoming close will be crucial for the crypto market’s directionality moving forward.

Levels to Watch For

According to analyst Crypto Birb, Bitcoin closing above $6,425 when the monthly candle closes in the very near future would be one of the feasible best-case scenarios for the cryptocurrency:

“Bitcoin monthly close above $6,425 would be a solid bullish [swing failure pattern] to make April to May brighter.”

Indeed, $6,425 is a crucial level from a long-term perspective, as that’s where BTC bottomed in December. Also, the low-$6,000s were absolutely key for Bitcoin during the 2018 bear market: the cryptocurrency bounced off that region on multiple occasions.

The asset managing to close above this historically-pertinent level would create a so-called swing failure pattern, according to CryptoBirb, which would give credence to a bullish reversal.

Many have also pointed to the fact that March’s candle looks like the bottoming process seen during the 2013-2015 cycle, during which Bitcoin saw a massive capitulation event that saw it similarly fall by some 50% within a few days’ time span, to only bounce back in the weeks that followed.

With Bitcoin currently changing hands for $6,470, the bull-case close scenario seems possible.

According to CryptoISO, however, whatever the candle closes at, it seems to be in a bearish structure.

The prominent trader wrote in a message published on March 31st that while “people [are] fixated on the monthly close,” the “high time frame market structure is bearish” because March’s candle opened at $9,200 to fall to $3,600 at the lows, a drop of more than 60%.

Bitcoin To Outperform In Q2?

Bitcoin is poised to close 10% down on the quarter, making this the fifth out of the past seven first quarters that the cryptocurrency has trended lower, suggesting this market has a negative winter seasonality to it.

The thing is, as can be seen in the chart below from Skew.com, the second quarter of years have historically been bullish for the cryptocurrency, with BTC rallying more than 20% in five out of the last six second quarters.

Featured Image from Shutterstock

Survey Reveals 87% of IT Professionals Are Concerned With Cryptojacking

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April Fools Sees Toilet Paper Token in Short Supply on CoinMarketCap

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Bitcoin All-Time High in 2020? Chances Are Only 4%, Options Market Signals

While many analysts are predicting a bitcoin (BTC) bull run, the options market sees a very low probability of the cryptocurrency hitting a new record high by December.

The cryptocurrency is currently trading around $6,450 – down over 200 percent from the record high of $20,000 set in December 2017. 

The options market shows just a 4 percent chance of bitcoin crossing above $20,000 before year’s end, according to data provided by the crypto derivatives analytics firm Skew. 

In fact, the odds of prices moving into five digits by the end of December are also quite low, options market levels indicate. 

1-skew_probability_of_btc_being_above_x_dec-2020
Probability of BTC being above five digits by December 2020
Source: skew

The probability of bitcoin ending the year above $10,000 is 16 percent while the odds of prices challenging the June 2019 high of $13,880 by December are 8 to 10 percent, the data shows. 

Options are derivative contracts that give buyers a right, but not the obligation, to buy or sell the underlying asset at a specific price (known as the strike price) on or before the specified date. A call option gives the buyer the right to buy, while the purchaser of the put option has the right to sell.

The probabilities are calculated with the help of the Black-Scholes formula, which is based on key metrics including call options’ prices, strike prices, the price of the underlying asset, the “risk-free” interest rate on investments such as U.S. Treasurys and the options’ time of maturity. 

Bullish expectations

Many analysts are confident the various monetary and fiscal measures recently announced by central banks and governments across the globe to counter the coronavirus-led downturn would bode well for bitcoin.

“The cryptocurrency can make a run toward all-time highs as the macro backdrop is quite bullish with trillions of dollars of liquidity scheduled to enter into the system,” said Mike Alfred, CEO of Digital Assets Data. 

The amount of fiscal stimulus announced by 22 countries over the last two weeks or so is equivalent to 75 percent of the global gross domestic product (GDP), according to JPMorgan. Meanwhile, central banks from New Zealand to Canada have slashed rates to zero. The U.S. Federal Reserve announced an open-ended asset purchase program last Monday.

“This money printing and lowering of rates might actually turn out to be a driver for more interest in bitcoin as a hedge against fiat,” said Luuk Strijers, CCO at the crypto derivatives exchange Deribit. 

So far, however, the cryptocurrency has struggled to decouple from the equity markets. In fact, it ended last week on a flat note at $5,870 despite the U.S. Senate’s decision to approve the record $2 trillion fiscal stimulus, later approved by the House and signed into law by President Donald Trump. 

“Cryptocurrency will continue to correlate to that of stock markets through the second quarter and the path to resurrection might only come by early third quarter,” said Ashish Singhal, CEO of the exchange CoinSwitch.co.

However, Singhal said the downside may be limited in the near term as the cryptocurrency is seen as a hedge to the massive inflation-boosting policies adopted by governments. 

Bitcoin is often touted as such a hedge because its supply is fixed and the pace of supply expansion is reduced by 50 percent every four years via a process called a mining reward halving. 

Odds of post-halving rally

Bitcoin is set to undergo its third mining reward halving in May, following which the number of bitcoins (BTC) entering circulation every 10 minutes (known as block subsidies) will drop by half, to 6.25 from 12.5.

“Historically, reward halving has led to monumental economic growth for bitcoin and other cryptocurrencies,” said Brandon Mintz, CEO of the bitcoin ATM provider Bitcoin Depot.

Matthew Dibb, co-founder and COO of Stack Funds, said he expects the halving event to create upward pressure on bitcoin’s price over the coming two months. 

“Investors will take up positions in anticipation of rapid appreciation post-halving,” offering an additional boost to market valuation of BTC, said Dibb. 

However, again, the prospects of a pre- and post-halving rally are quite low, according to the options market data. 

2-skew_probability_of_btc_being_above_x_apr-2020
Probability of BTC Being Above $6,000 by End of April
Source: skew

While the probability of bitcoin holding above $6,000 until the end of April is above 50 percent, the odds of prices crossing into five figures is just 4 percent, options data suggests. It’s worth noting that bitcoin was trading near $10,500 just six weeks ago. 

3-skew_probability_of_btc_being_above_x_jun-sept-2020
Probability of BTC Being Above $10,000 June-Sept. 2020
Source: Skew

The probability that bitcoin will find acceptance above $10,000 by the end of June is 12 percent, the data indicates. At the end of September, the probability climbs to 16 percent. 

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The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

Bitcoin Ends Q1 Down 10%, Outperforming Equities in Coronavirus Crisis

Bitcoin ended the first quarter of 2020 down from the start of the year, but not as badly as the record-setting losses suffered by global equities. 

On a 24-hour basis, bitcoin (BTC) was in the green less than a percent Tuesday afternoon Eastern time and ether (ETH) was up slightly as well. The performance of other cryptocurrencies was mixed. 

Notable assets on CoinDesk’s big board include decred (DCR) up 3 percent, XRP (XRP) in the green 2 percent and cardano (ADA) gaining 1 percent. Assets in the red included dash (DASH) slipping 1 percent and bitcoin SV (BSV) in the red 1 percent. All price changes are in the past 24 hours as of 20:30 UTC (4:30 p.m. ET) on March 31. 

In the traditional markets, Japan’s Nikkei 225 index closed down slightly, less than a percent. Europe’s FTSE 100 ended the day up 1.3 percent. In the U.S., the S&P 500 closed New York’s trading day down 1.6 percent. 

But for the full quarter, the Nikkei 225 was down 20 percent, the worst three-month showing for the Tokyo-based index since 2008. The FTSE lost 14 percent for the period, its second-worst quarterly performance ever, beating only the fourth quarter of 1987. The S&P 500 was in the red 18 percent to close out Q1 2020, its worst quarter since 1938

Cryptocurrencies operate 24/7 and don’t have quarters for closing the books. However, bitcoin, the market bellwether, was down just 10 percent for 2020’s first three months. 

Semi-correlated?

Despite its relative resilience, bitcoin still has been trending downward over the course of the first quarter along with traditional markets, undermining the narrative that it is a “non-correlated” asset.

“I think correlation across assets is still quite high, a telltale sign of when macro matters more than micro,” said Visahl Shah, founder of Alpha5, a new derivatives exchange backed by large crypto funds.

Indeed, the current period of turbulence isn’t the first time bitcoin has behaved similarly to mainstream financial investments.

“The lack of correlation to equities was a bit premature to announce. We had periods of high correlation, for example, in 2018, when bitcoin fell along with equities in December of that year,” said Siddhartha Jha, a former Wall Street analyst now working on blockchain-focused startup Arbol. 

On the other hand, he said, “we have had other periods of higher correlation to gold,” more befitting bitcoin’s aspirations as a hedge against inflation.

Since 00:00 UTC Tuesday, bitcoin has been trading in a tight range of $6,300-$6,500.

btcmar31
Trading on Coinbase since March 28. Source: TradingView

“BitMEX open interest remains low, but Coinbase is reporting great inbound activity. None of the typical signs for a crypto bull-run are there,” Shah said, referring to major derivatives and spot exchanges, respectively. 

March has produced the lowest level of outstanding positions on BitMEX in 18 months, although the derivatives exchange’s volume has seen gains the past four days prior to leveling off Monday. 

bitmexopeninterest
BitMEX XBTUSD open interest. Source: Skew

Gold dropped over 2 percent Tuesday as of 20:30 UTC, breaking out of its consolidation pattern on heavy selling volume March 31.

goldmar31
Contracts-for-difference on gold. Source: TradingView

The road ahead

While the coronavirus outbreak has dealt a heavy blow to the world economy, analysts are unsure how long it will take for growth to resume. 

“Recessions typically unfold over a longer period of time – at least two consecutive quarters,” said Guy Hirsch, U.S. managing director of multi-asset platform eToro.

For the time being expect bitcoin’s role to keep switching for traders – it all depends on how other markets perform, experts say. 

“The novel-tech part of bitcoin leads to correlation with Nasdaq, especially as many of the investors have overlaps,” said Arbol’s Jha. “Other times it will go with gold. But if equity markets are crashing, that correlation is going to show up very fast.” 

How the purchasing power of the U.S. dollar holds up given massive doses of stimulus from Washington is something else analysts are watching keenly. 

“The economic blow from the coronavirus pandemic has been instant and the impact is unprecedented,” added eToro’s Hirsch. “There is a growing consensus that due to the Fed announcing unlimited QE, investors could soon be looking to BTC as an inflation hedge against a depreciating dollar.“ 

Disclosure Read More

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.