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Bitcoin’s trading intensity is not dead yet

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Bitcoin has not looked back since it surged over $10,000 almost a week ago. Trading at close to $11,500 a pop, the cryptocurrency’s highest price since September 2019, the market is rife with immense trading activity. Thus the question arises –  is it likely to sustain?

While some would say that this rise from $9,500 to $11,500 in under a week is too quick and fast to sustain, others contend it was on the cards for the past two months. Since May 2020, Bitcoin had been locked in a tight trading channel, despite the grim macroeconomic situation, its block halving, and stock markets trending downwards.

Besides a brief move over $10,000 in early-June, the cryptocurrency was trading flat and the 26 July move allowed it to not only break out of its low-momentum channel, but spurred a wave of intense trading.

According to data from Chainalysis market insights, the 26 July move peaked the ‘trade intensity’ metric to a massive high of 6.351. Trade intensity measures the order book trades to exchange inflow and an increase in the metric is indicative of either order book trades surging, exchange inflows dropping, or both in tandem.

On the contrary, a fall in the metric would mean decreasing order book trades, increasing exchange inflows, or both in tandem. Since trade intensity is rising during the price increase, it suggests cryptocurrency exchanges are seeing soaring order book trades, despite traders injecting money into exchanges. Hence, an increase in trade intensity suggests “more market participants want to buy than to sell,” which is overall a positive sign for the Bitcoin market. 

Bitcoin trade intensity | Source: Chainalysis market insights

With trade intensity jumping to 6.35 Bitcoin, it meant that for every 1 Bitcoin received by exchanges, 6.35 Bitcoin was traded. Here “traded” can either be bought or sold and does not directly refer to the cryptocurrency being liquidated for fiat currency. The opposite is the likely scenario during a price fall, a time when traders would like to sell their Bitcoin for cash. The median trade intensity value of 6.5 was over the 180-day average of 5.3, another positive sign. 

However, the intensity soon fell off. As was expected, the trade intensity dropped off quickly after the consolidation as initial trading goals were met and the metric dropped to a low of 3.87 on 31 July. It should be noted that the 3.87 value, while being below the 180-day average, was still higher than the figures in early and mid-July. Further, as the price pushed over $11,500 on the eve of August, the trade intensity metric increased to 4.02.

Why did trading intensity drop so quickly despite the price holding five-figures? Well, given the derivative of the metric, it is likely that order book trades dropped as traders pocketed their profits or exchange inflows rose in greater proportion as more traders put money into their respective trading accounts to benefit from the Bitcoin trend. Since exchange inflows of BTC on exchanges have increased, the latter is true, while the former cannot be completely ruled out either. 

As per the chart below, exchange inflows dropped between 27 July [change of 45,800 BTC] and 31 July [change of 32,600 BTC], but was showing an increase as on 1 August. 

Bitcoin exchange inflow | Source: Chainalysis market insights

Who is responsible for the increase in trading intensity? Well, given the rise in trading intensity and the immediate fall, after the profits were pocketed, fingers can be pointed at institutional investors. A recent report by Chainalysis published on 31 July read,   

“This week’s activity comes after a period where markets looked like they were operating in isolation from external influence, running largely on the internal dynamics of professionals trading amongst themselves rather than being swung by retail sentiment or the actions of long-term investors.”

Source: https://eng.ambcrypto.com/bitcoins-trading-intensity-is-not-dead-yet

Blockchain

Invest 3% in Bitcoin to Avoid COVID-19 Lockdown Devaluation — BitGo CEO

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Coronavirus lockdowns will force people out of fiat currency and into gold and Bitcoin (BTC), the CEO of cryptocurrency asset manager BitGo has warned.

In a series of tweets on Aug. 12, Mike Belshe strongly urged investors to divert a minimum of 3% of their portfolio into Bitcoin.

Belshe: investors will move from cash to gold, Bitcoin

As multiple jurisdictions around the world reenter compulsory lockdown conditions, Belshe said that in the United States, the government had made a prison for itself using the policy.

“The government is being forced to maintain lockdowns for political correctness, which will force them to print money even faster. Institutional investors are flagging this and recognize the devaluation will make cash hard to hold,” he wrote. 

Those institutions hit the headlines conspicuously this week, when billion-dollar corporation MicroStrategy confirmed it had adopted Bitcoin as its treasury reserve asset.

A $250 million buy-in cemented the sense of change, with CEO Michael Saylor highlighting Bitcoin’s unique properties as money.

“They’re looking for alternatives, and it… comes down to Bitcoin and gold,” Belshe continued.  

“If you don’t have some Bitcoin now, it is time to put at least 3% of your net worth into Bitcoin. This is the lowest risk, highest asymmetric upside investment you will likely see in your lifetime. Or stop the lockdown. But still get Bitcoin.”

2020 macro asset returns comparison as of Aug. 12

2020 macro asset returns comparison as of Aug. 12. Source: Skew

Hard money not inflationary paper

As Cointelegraph reported, the premise behind lockdowns has come under heavy criticism from Bitcoin supporters. 

In particular, “The Bitcoin Standard” author Saifedean Ammous has lambasted the measure as being far more detrimental to the population of a country in the long term than Coronavirus.

The criticism follows on from that contained in Ammous’ book and others critical of economic policy based on spending and borrowing, such as Henry Hazlitt’s “Economics in One Lesson.”

A clear relationship between inflationary fiat currency and reduced prosperity means that Bitcoin is the only genuine solution for those who wish to save for the future.

This week, the message became all the more clear as data showed correlation between Bitcoin price action and expanding central bank balance sheets.

Source: https://cointelegraph.com/news/invest-3-in-bitcoin-to-avoid-covid-19-lockdown-devaluation-bitgo-ceo

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Cointelegraph Launches Newsletter for Professional Investors

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Every 1st and 15th, Cointelegraph Consulting provides the latest inside scoop on cryptocurrency price action and rationale in its Market Insights newsletter. Here’s a preview of one of this month’s editions. 

Editor’s note

Crypto asset prices have flown upward in recent weeks, with various altcoins posting gains reminiscent of the great 2017 digital asset bubble. Assets such as Chainlink (LINK) and Band Protocol (BAND) have tallied triple digits percentage gains. 

Bitcoin (BTC), the industry’s pioneer asset, has also shown significant upside action. The asset travelled up slightly past $12,000 on Aug. 2 before subsequently falling more than $1,000 in the same 24-hour period. Aug. 10 saw BTC return to the $12,000 level, again facing rejection, sustaining a subsequent drop of several hundred dollars. Overall sentiment in the crypto investing and trading realm, however, remains high. 

Mainstream financial players also continue entering the digital asset industry via Bitcoin, with intelligence giant MicroStrategy as one of the latest entrants. Buying over 21,000 BTC, the firm has adopted the coin as its reserve asset.  

Benjamin Pirus, Reporter

Insights from around the digital asset sphere

Bitcoin whales may have sold some of their stockpiles. Recent data shows only 15,912 Bitcoin addresses holding 100 or more BTC — the lowest number in five years. Such network data implies large Bitcoin participants may be selling instead of accumulating. 

In terms of sentiment, however, crypto’s inaugural asset shows a major turnaround from the bearishness seen previously. Over the last two weeks, the market has expressed a significant bullish tone, topping at 1.2 standard deviations during Bitcoin’s most recent run toward $12,000. 

Data also shows an uptick in the number of dollars moving onto centralized exchanges via U.S. dollar stablecoin USDC — a signal which has often proved as a precursor to previous bullish Bitcoin price action. 

In contrast, Bitcoin’s Market Value to Realized Value, or MVRV, ratio looks troublesome, posting a 30-day value of 1.15 on August 2. This essentially means short-term Bitcoin investors boasted an average 15% profit across the board. 

On a separate front, Ethereum holds hot on Bitcoin’s tail in terms of transaction volume. Bitcoin now touts 3.4x the transaction volume seen on Ethereum’s blockchain, a dwindling lead, according to numbers from the beginning of August. 

Read the full newsletter edition here to get the entire scoop, complete with charts and images. 

Cointelegraph’s Market Insights Newsletter strives to share our knowledge on the fundamentals that move the digital asset market. With market intelligence from one of the industry’s leading analytics providers, Santiment, the newsletter dives into the latest data on social media sentiment, on-chain metrics, and derivatives. 

We also review the most important news hitting the industry including mergers and acquisitions, changes in the regulatory landscape, and enterprise blockchain integrations. Sign-up now to be the first to receive these insights.

Source: https://cointelegraph.com/news/cointelegraph-launches-newsletter-for-professional-investors

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Bitcoin Cash short-term Price Analysis: 12 August

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After Bitcoin’s collapse down to $11,285, the rest of the altcoin market finally appeared to tag along for the current bearish ride. Bitcoin Cash, just like other major altcoins slipped by 12.36%, as its valuation witnessed a downtrend from a high of $305 to $270.

After the markets actively pictured a recovery, a short-term long opportunity is prevailing for Bitcoin Cash in the industry.

Bitcoin Cash 1-hour chart

Source: BCH/USD on Trading View

Analyzing the short-term chart for Bitcoin Cash, clear decimation of the immediate support at $291 can be observed. The price dipped under $280 as well but at press time, recovery is taking place overturning the former bearish trend. The low was registered on $270 a couple of times, which led to a minor double bottom pattern over a period of 8-hours. With the Relative Strength Index or RSI eyeing 50 at the time of writing, a complete recovery of valuation is unlikely.

However, 10-Moving Average (10-MA) and 20-Exponential Moving Average (20-MA) were acting as immediate support for the surge at press time.

Bitcoin Cash 30-mins chart

Source: BCH/USD on Trading View

Now, analyzing the 30-min chart for BCH, a price entry point at $276 with profit margins exit at 291 leads to a risk-reward ratio of 2.39x. The stop loss can be placed at $270, and any declination below that might lead to staggering losses. The minor concern with the 30-min chart is that RSI is already reaching a little saturation in terms of buying pressure hence, a drop down to $280 should be expected.

However, support for 10-MA and 20-EMA should allow the asset to reach $291 before undergoing a trend reversal.

Conclusion

Bitcoin Cash should register a re-test at $291 under the next 12-24 hours.

Source: https://eng.ambcrypto.com/bitcoin-cash-short-term-price-analysis-12-august

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