It is the price action in the markets that has captured the attention over the past week. Unlike the many times this has happened in 2022, luckily it’s for the right reasons! The cryptocurrency market had a promising start to the year, reaching a market cap of $1 trillion for the first time since November of the previous year. We are currently navigating one side or the other of this key level.
The price of bitcoin has stabilized above $21,000 in recent days, allowing the currency to recover to its previous level before the bankruptcy announcement of exchange FTX. It took a little more than two months to put this crisis behind us, at least from a bitcoin valuation point of view. Nearly $500 million in short positions have been liquidated since Friday, marking the highest level since October 2022. This recent price move also comes as bitcoin mining difficulty rose more than 10% to hit a new record high of 37.59 T, against the 34.09 T of last Sunday. Recall that mining difficulty measures how difficult it is to solve the cryptographic puzzle required to create a block on the Bitcoin network. The difficulty is adjusted every two weeks and the next adjustment is scheduled for January 28th. An increase in mining difficulty is generally seen as a sign of a network’s strength and growth, indicating renewed confidence in the market at large. However, this comes at a cost to miners who have to spend more resources to generate the same amount of coins as before.
The current price range also has an important bearing on network operator sentiment. According to data from Glassnode, the current cost to mine one bitcoin is around $18,800. Considering that bitcoin is currently trading above $20,000, this means that average mining companies can once again operate at a profit. This increase also makes it possible to exploit more than 50% of the circulating supply of bitcoins.
“Many of these patterns tend to act as important psychological resistance levels during bear markets, making this particular event noteworthy,” Glassnode analysts wrote. The rally, which started last week and accelerated over the weekend, could be attributed to signs of cooling in US inflation. Priced at over $19,000, Glassnode calculates that miners could now earn more bitcoin mining than it costs to run their power-hungry machines. Also, the average holder has bought BTC at a lower price, which means they can sell it at a profit.”
The cryptocurrency conglomerate digital currency group, including the owner of Genesis and the Grayscale Bitcoin Trust, informed its shareholders that the company was suspending dividends until further notice. “In response to the current market environment, DCG has focused on strengthening our balance sheet by reducing operating expenses and preserving cash. As a result, we have made the decision to suspend distribution of DCG’s quarterly dividend until further notice,” DCG said in a letter to shareholders sent on Tuesday. Other than this decision, there has been no notable progress related to the Genesis liquidity.
According to a filing before FTX’s creditors committee on Tuesday, FTX learned that a significant portion of the $181 million in assets held by FTX US, the U.S. subsidiary of the bankrupt crypto company, has been subject to “unlawful reclamations carried out by third parties” after bankruptcy. Unauthorized transfers made on FTX.com’s main platform grabbed the headlines when hundreds of millions of dollars were moved the day after the company filed for bankruptcy protection under the law. Chapter 11 on November 11th. However, the $90 million transferred from FTX US has not been disclosed by the company until now. According to FTX’s filing, $88 million of FTX US’s remaining assets have been moved into a cold wallet, and another $3 million is awaiting transfer into the same wallet. The following infographic was shared:
Coinbase has confirmed it will halt its operations in Japan within weeks, citing the current challenging market conditions. “Due to market conditions, our company has made the difficult decision to discontinue operations in Japan and conduct a comprehensive review of our operations in the country,” the San Francisco-based company said. “However, we are committed to making this transition as smooth as possible for our valued customers.” Note that the Kraken exchange made the same announcement. For its part, Binance is instead trying to re-enter the market, the company having left it in 2018.
After heated debate from community members, Polygon has finally decided to move forward with its hard fork. The latter was implemented yesterday without technical problems. Seeks to increase transaction speed and reduce transaction price jumps that occur in times of congestion.
Wallets holding Ether are on track to soon cross the 100,000,000 mark, which crossed 92.5 million for the first time on Monday. Since 2019, this figure has increased by around 20 million a year. If this pace continues, non-zero ETH portfolios are likely to hit 100 million by Q2 2023.
More than 16 million ether has been deposited in the contract staking outof Ethereum. This 16 million ETH figure constitutes more than 13.28% of the total Ether supply and represents nearly $22.38 billion in current prices. It comes nearly two years after the Ethereum staking contract went into effect in 2020. The $22.38 billion of ETH placed in this contract will be impossible to withdraw until Ethereum’s next major update. While the growing number of pledged ETH could be interpreted as a promising sign for Ethereum security and adoption, it could increase pressure on network developers to speed up work to enable withdrawals.
The surge in the price of bitcoin has been accompanied by a massive growth in trading volume. In the past week, BTC volume more than doubled to $10.8 billion, a 114% increase in seven days. Increased volumes generally correlate with increased volatility. However, that has not been the case so far. On-chain analyzes also point to positive signs that the recovery of bitcoin is potentially underway. The more the market is able to absorb the selling pressure without prices tumbling, the lower the general market fear and possible macroeconomic change.
Finally, note that bitcoin’s 30-day correlation with the Nasdaq reached 0.29 on Jan. 17, BTC’s largest divergence from the stock index since December 2021. Stock markets may continue to fluctuate due to resilience of high inflation, but bitcoin’s divergence from the stock market could help BTC become the future many predict for it, one of a safe haven rather than a solely risky asset.
The fund’s capital is obviously fully invested, mainly in BTC and ETH.
This article is offered by Fonds Rivemont. The Rivemont Crypto Fund is the first and only actively managed crypto fund in Canada. Eligible for RRSP and TFSA. Accredited investors can find out more here.
Disclaimer: This column does not necessarily reflect the opinion of CryptonewsFR and does not constitute investment advice or trading instructions..
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