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Samuel Haig

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It appears many Chinese miners have completed their annual migration from Sichuan, with Bitcoin’s hash rate spiking more than 40% in two days.

The hash power of the Bitcoin (BTC) network has jumped by roughly 30% over the past 24 hours, which, if sustained, suggests a major difficulty adjustment may soon be incoming.

According to Coinwarz, Bitcoin’s hash rate currently sits at 157.5 exahashes per second, or EH/s, after briefly pushing above 160 EH/s. As of this writing, BTC hash power has increased by 42% in two days.

Bitcoin hash rate 1-month chart: Coinwarz

The spike follows a sharp decline in hash power in late October, which many analysts attributed to the end of the rainy season in the Chinese mining hub of Sichuan.

The province’s abundant and cheap hydroelectric power is estimated to attract around 80% of Chinese miners during the wet season. In December, CoinShares estimated that Sichuan accounted for 54% of global mining activity.

Quantum Economics analyst Jason Deane speculated that the sudden increase in Bitcoin hash power could be a sign that many Chinese miners have completed their migration from Sichuan and restored operations in other local mining hubs such as Xinjian and Inner Mongolia.

The sudden spike in mining activity suggests the network is likely to produce another significant difficulty adjustment.

A major upward adjustment would come at the chagrin of non-Chinese miners who have been enjoying boosted profits after October’s apparent migration from Sichuan resulted in a 16% negative difficulty adjustment — the second-largest downwards adjustment in Bitcoin’s history.

Earlier this week, the world’s largest generator of hydroelectric power for the private-sector, Russian firm En+ Group, announced it would be launching a cryptocurrency mining venture in partnership with local company BitRiver.

Author: Samuel Haig

Source: Coin Telegraph: Big mining move: Bitcoin’s hash power increases 42% in two days

After record strength in the Bitcoin markets at the end of July, Kraken is predicting that BTC could see price gains of up to 200% over the coming weeks and months.

Major United States-based crypto exchange Kraken has released a report predicting that Bitcoin (BTC) will rally by between 50% and 200% in the coming months.

The report notes that Bitcoin posted a 21-month low for volatility on July 24 of just 23%, and stated that BTC’s 12 historic volatility lows (of between 15% and 30%) have typically been followed by a rally of 140% on average.

With August usually the third-most volatile month for BTC price fluctuations, Kraken is predicting that upward momentum produced by Bitcoin at the end of July will continue for several months to come.

Late-July Bitcoin rally defies history

Kraken emphasized that Bitcoin’s recent rally resulted in the second-strongest July for BTC price performance since 2011, noting that July was usually the third-weakest calendar month for Bitcoin.

Bitcoin’s 14.5% jump between July 27 to July 31 drove the month’s overall performance to a 24% gain, positioning the market for continued momentum, according to Kraken.

Prior to the move, July produced what the report describes as a “suppressed pocket” of weak volatility. Ten of the 12 past instances of Bitcoin entering a suppressed pocket have been followed by gains exceeding 196%.

Kraken estimates that 44% of July’s total trade volume transpired during the final seven days of the month.

BTC correlates with gold

The report also notes that Bitcoin’s rolling 30-day correlation with gold jumped to a one-year high of 0.93 on July 31.

The spike comes after the monthly correlation fell to a 10-month low of -0.66 on July 2, contradicting predictions that gold and Bitcoin would emerge as popular “safe-haven” assets and move in-step throughout the COVID-19 pandemic and recession.

Author: Samuel Haig

Source: Coin Telegraph: Boom! Kraken Predicts Imminent Bitcoin Price Rally of Up to 200%

Crypto research firm Messari has estimated that Bitcoin could trade for $50,000 each if institutions allocate a low-single-digit portfolio percentage to BTC.

Messari’s Ryan Watkins has crunched the numbers and predicts that if institutions allocate just 1% of their portfolios to Bitcoin, then BTC’s market cap could rise to above $1 trillion,

Watkins’ research sought to calculate the impact on the BTC price of institutions following the famed hedge fund manager Paul Tudor Jones’ example of investing a “low single-digit percentage” into Bitcoin.

$1 trillion BTC market cap

The researcher predicts that a tiny percentage allocation from endowments and foundations, family offices, sovereign wealth funds, pension funds and mutual funds to BTC would result in around $480 billion of new money entering the Bitcoin market.

Citing research by crypto researcher Chris Burniske that found fiat flows into crypto to typically drive price gains of between two times and 25 times during the 2017 bull trend, Watkins estimates that “an aggregate 1% institutional allocation to Bitcoin can easily bring Bitcoin’s market cap above $1 trillion, or over $50,000 per BTC.”

Which institutions will lead the crypto charge?

While Watkins believes that “Bitcoin may not need institutions to succeed” he says that “if Bitcoin is to become a globally adopted non-sovereign store of value, it will need to convince institutional investors to transfer wealth into the asset.”

Watkins predicted that hedge funds will lead the institutional charge into crypto, however Ryan Radloff, the CEO of multi-billion custodian Kingdom Trust, predicted that the United States’ $28 trillion retirement sector will be the first-mover as consumers demand the ability to allocate digital assets toward their retirement portfolios.

Other analysts believe that institutions will be brought into the fold by increasingly sophisticated and regulator-friendly innovations within the crypto asset industries, with BOX Digital Markets’ Jay Fraser predicting significant institutional engagement with the emerging security token sector.

Author: Samuel Haig

Source: Coin Telegraph: Messari: 1% Allocation From Institutions Could Drive BTC to $50,000

The CEO of Kingdom Trust, a regulated custodian managing over $13 billion in assets, believes a generational shift will soon open the $28 trillion retirement industry to Bitcoin.

In an interview with Cointelegraph, Ryan Radloff, the CEO of the crypto-friendly $13 billion custodian Kingdom Trust, asserted that a “generational change” will soon open the $28 trillion United States retirement fund industry to crypto assets.

“Right now, the single largest addressable market for Bitcoin is the 28 trillion dollars in the U.S. retirement market,” Radloff asserted, “There is no single more addressable market for Bitcoin to penetrate, or all digital assets, for that matter.”

“Right now, all of that money is about to go through this generational change, and there has been hardly any penetration of Bitcoin into that market today,” he added.

“From a stock-to-flow standpoint, that is a massive deal, because now what you’re doing is unlocking a massive amount of new dollars that can in-flow into our industry. And that’s what that’s why it’s so important.”

7.1 million Americans own Bitcoin

Radloff predicted that the first wave of capital from moving to crypto from the retirement market will come from the 7.1 million Americans who already own Bitcoin (BTC). However, he noted that few crypto asset holders realize that they can hold BTC in their retirement accounts.

“When the IRS [Internal Revenue Service] decided to tax Bitcoin, consequently it […] directly enabled [Bitcoin] to be held by qualified custodians and in retirement accounts,” he said.

“I think that what you’re going to see over the next three years, is as that the 7.1 million of us that are already [invested in Bitcoin] are about to wake up and realize that there’s an opportunity to get [their] savings out of the Fed’s rattrap, out of the endless Keynesian cycle of money printing and stocks,” Radloff continued.

“What we will consider success is that we make sure that all 7.1 million Americans that have bought Bitcoin already and have a retirement account know that they can buy Bitcoin in their retirement account in a regulated regulatory approved structure.”

Mainstream investors warm to Bitcoin

Radloff emphasized that “Bitcoin’s brand” is becoming increasingly “validated” as leading economists like Paul Tudor Jones look to it as “a good hedge against an inflationary environment.”

In March, Travis Kling, the chief investment officer of digital asset investment firm Ikigai Asset Management, likened Bitcoin to “hurricane insurance.”

Author: Samuel Haig

Source: Coin Telegraph: Generational Shift to Open $28 Trillion Retirement Market to Crypto

The International Monetary Fund (IMF) has published a stark prediction that the unprecedented global economic slowdown triggered by ‘the great lockdown’ will get much worse before it gets better.

With Bitcoin (BTC) experiencing a record correlation with the traditional markets, the cryptocurrency needs to break away from the S&P 500 if it has any chance of producing the highly anticipated post-halving bull run.

IMF drops global growth estimate by 6.3%

On April 14, the IMF published its quarterly World Economic Outlook report, describing the COVID-19 induced lockdown as the worst economic downturn in 90 years and predicting a total of nine trillion dollars of losses by 2022.

The report’s growth estimate has fallen by 6.3% since January, predicting a year-over-year recession of 3% as economic activity retraces in more than 170 nations.

IMF Director of the Research Gita Gopinath said the prediction was based on the assumption “the pandemic and required containment peaks in the second quarter for most countries in the world, and recedes in the second half of this year” and said the growth forecast was a “major revision over a very short period”:

“This makes the Great Lockdown the worst recession since the Great Depression, and far worse than the Global Financial Crisis.”

The 2008 financial crisis saw a 0.1% global retraction in growth 12 months from its outset. However this current crisis has an immediate impact on China and India. The IMF is more optimistic about 2021, predicting a 5.6% global recovery.

Impacts of ‘Great Lockdown 2020’ and 2008 Global Financial Crisis on Regional Economies. Source: IMF

IMF predictions are bad news for Bitcoin

The International Monetary Fund’s outlook for the global economy may comprise a negative omen for the Bitcoin and cryptocurrency markets, with BTC recently producing record correlation to the S&P 500. While it’s unknown how traditional markets will react if the crisis deepens, the history of major financial crises suggest they have further to fall.

According to data published on April 14 by Coinmetrics, the mid-March market turmoil saw Bitcoin in record correlations with the traditional markets. While confluence appeared to briefly normalize towards the end of March, early April has seen correlations rebound and reapproach last month’s record levels.

Correlation between gold and BTC at all-time high

However, the immediate liquidity crisis appears to have driven confluence across most asset classes — with correlation between the S&P 500 and gold reaching its highest in half a decade, while confluence between Bitcoin and gold sets a new record.

Correlation between Bitcoin and gold. Source: CoinMetrics

Gold’s performance during the GFC could prove instructive. While the initial liquidity crisis drove a 30% drop in the price of gold during the first six months of the 2008 crisis, gold recovered to gain 150% over the next three-and-a-half years.

Should history repeat itself, Bitcoin will have to shake its confluence with the traditional markets and move in-step with gold to produce the anticipated post-halving bull trend.

Coinmetrics said that over the long term, the correlation between Bitcoin and the stock market was expected to disappear:

“Although correlations recently reached all-time highs, it is unlikely that Bitcoin and S&P 500 correlations will remain elevated in the long-term without major changes in the fundamentals of one or both markets.”

Author: Samuel Haig

Source: Coin Telegraph: Bitcoin at Risk as IMF Warns of Worst Downturn in 90 years

Economist and academic John Vaz believes Bitcoin (BTC) still faces stiff competition from Facebook’s troubled Libra project.

Vaz told Cointelegraph that Bitcoin has scaling challenges in terms of payments and was used disproportionately as a vehicle for speculation. By contrast he said Libra has been purpose-built to scale as a payments network and could quickly emerge as a major competitor despite its ongoing issues with regulators.

“Libra isn’t dead,” he said,“they’re just navigating the regulatory nightmare.”

However, Vaz dismissed central bank digital currencies (CBDCs), describing them as a weak “defensive posture” in response to the threat crypto assets posed to their control over money supply and credit.

Vaz said that “the biggest competition for Bitcoin comes from other cryptocurrencies”.

Facebook’s Libra is very interesting

While noting that Facebook suffers from issues of public mistrust, Vaz said that the proposed model for the Libra stablecoin was “very interesting” — emphasizing both the basket of assets underpinning the stability of the instrument, and the existing networks that large tech companies are able to tap into.

The economist argued that companies like Facebook could capitalize on their existing user base and said that financial transactions were already taking place.

“They are targeting a market which is ready-made for them in the sense that people are already making transactions on Facebook, and Messenger, and WhatsApp, and Instagram — they own the lot. So they’ve got the message traffic, and those people are doing economic transactions already using fiat.”

As such, Vaz said that Libra would launch with “a very large ‘domain possibility’ — perhaps more than any other cryptocurrency from day one.”

He predicted that Libra’s initial target will be developing countries rather than developed markets, and stated: “They will entrench themselves there – where people are already heavily using the apps and they have a need for payments.”

CBDCs comprise defensive reaction to crypto asset

Vaz doesn’t believe central bank digital currencies (CBDCs) will be much of a competitor to crypto assets and stablecoins and were “a defensive posture”:

“They will be a kind of rearguard action being fought by the central banks because they don’t like cryptocurrency.”

Rather than central banks posing a threat to Bitcoin, John believes that Bitcoin and other cryptocurrencies threaten to undermine banks’ control over the money supply. He said: “It takes away their ability to pull a lever in the economy because under things like Bitcoin, you can’t create money by the way of credit.”

“Banks can lend that money up to maybe eight or nine times on a fractional reserve system. So a lot of banks create massive money supply on the fractional reserve system. Under Bitcoin, you can’t lend what you don’t have.”

Vaz asserts that CBDCs do not offer any benefits beyond peer-to-peer settlement — “which you get by default with cryptocurrency.” “Central bank digital currencies are probably more about tracking money than providing benefit,” he added.

Author: Samuel Haig

Source: Coin Telegraph: Libra Stablecoin Is Still a Major Threat to Bitcoin: Economist

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