THE HALVENING IS UPON US.
Yes, after much hype, the infamous bitcoin halvening has come and gone. The next 210,000 blocks will now yield 6.25 bitcoins per block reward.
Does this call for a hooray? Not Yet. Before we get too excited, we need to see how this will impact the market, and only time will tell.
Our analysts will be glued to their monitors sifting through the candlesticks to find new trends to bring to you. So make sure you tune in next week for our post-halvening analysis. Until then, enjoy this week’s volume 6 of ‘The Digital Asset Digest’. As always, we will be touching on all things crypto. Enjoy!
Bitcoin – Bitcoin closed at $9,895 on Friday morning, up 12.4% for the week just days before the third halving. The surge seemed to have been constrained to Bitcoin alone as opposed to the cryptocurrency market as a whole. Ether was completely unmoved for the week and XRP closed down 0.18%.
Indices – The S&P 500 was up 3.5% for the week as increased optimism surrounding the coronavirus and U.S. – China trade relations drove returns. These returns were largely driven by gains in energy and information technology, with WTI futures rebounding a stellar 25.1%.
Commodities – Gold was up slightly, again crossing the $1,700/oz mark. Silver, on the other hand, boasted an impressive 5.9% return.
Bonds – Treasury yields were more or less unmoved for the weekend, with the 10-year yield rising 5 bps for the week. Despite the rally in equity markets, fear continues to be the prevalent sentiment, and the market will be watching coronavirus figures closely as the U.S. and countries in the EU begin to lift lockdown restrictions.
“Billionaire investor Paul Tudor Jones made a prescient call on bullion in 2019; now he’s saying that bitcoin, the controversial digital currency, reminds him of gold in the 1970s, and may be the best hedge against inflation in the age of coronavirus. The famed hedge-fund investor, writing in a recent research note, cited unprecedented money-printing and stimulus measures by the Federal Reserve and the U.S. government amid the COVID-19 pandemic as key reasons behind his newfound appetite for the world’s most prominent cryptocurrency.”
“Bitcoin mining is feverishly hot these days, especially just before the great Bitcoin reward halving that will take place on or around May 12, 2020. During the last six months, there’s only a handful of ASIC mining rig manufacturers and all of them stem from China. This includes companies like Bitmain, Ebang, Strongu, Innosilicon, Microbt, and Canaan. There are a few other manufacturers, but the firms are not nearly as sizable as these six businesses. Just recently, the company Ebang filed for a $100 million initial public offering (IPO) in the U.S. and the company will await a decision from the SEC. Although, the firm’s prospectus shows that Ebang suffered from some losses in 2019, and it may reflect the IPO’s initial raise.”
Bitcoin miners sell BTC months after halving, on-chain data suggests
“Bitcoin’s third halving is less than a day away and the cryptocurrency community remains divided on whether the price will rise or drop after the event. Interestingly, on-chain data from previous halvings suggests that after the halving Bitcoin price may not see an immediate drop. Google Trends data shows that searches for the halving have already surpassed previous all-time highs, and the crypto community has been issuing a variety of price estimates for the post halving price.
ExtStock is a cryptocurrency exchange based in the U.K. founded in 2018. The company boasts over 20,000 traders and claims that its API can process up to 1,000 applications per second, making it a useful platform for high-frequency traders and scalpers. XT is ExtStock’s proprietary cryptocurrency that fuels the exchange. It’s an ERC-20 token whose main use is to pay for trading commissions on ExtStock. ExtStock also pays 100XT for every trader that registers through a referral link after passing KYC verification.
XT went through the first stage of its IEO on January 15, where it sold 100 million XT tokens in less than a minute. The token went through the second stage of its IEO in March, although they were unable to offload all of its tokens (92% of tokens offered were sold). The company claims that this was caused by a sharp collapse of quotes. A third and final stage is in the works, although for the time being, it has been postponed indefinitely.
Despite the success of its token, the company suffers from several allegations of fraudulent activity. No record of a founder can be found on its website, nor can any employees be traced on LinkedIn. Lisk reported in a tweet that several of its users had issues withdrawing funds from the exchange and cautioned users to be cautious. ExtStock has also been accused of inflating volume by quoting a higher price on BTC to induce transfers from users. In May, Cointelligence reviewed the exchange and rated it a scam.
XT currently trades at $0.27 with a market cap of $164.9 million. Please note that these token highlights are not a recommendation. We highly encourage readers to engage in their own due diligence before purchasing tokens.
Cryptocurrency Weekly Market Performance
Indices and Commodities
The Security Trilemma and the Future of Bitcoin
“The imminent halving of the “block subsidy” exposes a fundamental threat to Bitcoin. Whenever a new block is added to the blockchain, a quantum of new bitcoins is created and paid to the miner adding the block. As miners compete for this subsidy, they drive up the system’s difficulty, making it harder for so-called 51% attacks to succeed. But the subsidy is set to diminish over time, halving very soon to 6.25 bitcoins per block, so that the total supply of coins will eventually reach 21 million. And as the subsidy shrinks, Bitcoin could fall victim to 51% attacks, just as smaller cryptocurrencies already have.”
Technical Review and Market Summary
Indicators are pointing towards a bearish continuation this week. During last week’s Technical Review, we forecasted that indicators were pointing towards a bearish reversal and cautioned traders to watch for when BTC’s RSI crossed below 70. On Saturday, RSI finally crossed, triggering our prediction. Optimism surrounding the halving was clearly short-lived, as traders pushed BTC down from 9.5K to almost 8K in the span of a single day. Now that Bitcoin is in freefall, we predict that it’ll be a while before BTC finds support. In the meantime, we are bearish and will be sitting on the sidelines until a more positive signal starts to emerge.
Finally, a week of sustained gains in the non-crypto markets! Last week we said it was comfortable to see traders adjusting to operating in a COVID-19 world. Now, after last week’s market performance, I think they might be getting more than comfortable. However, the bearish sentiment towards Bitcoin, even in the midst of the halvening is troubling. Is the market truly disinterested, or are retailers just slow to react?
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Make sure to check out our post-halvening analysis next week to find out!