Hello traders and investors,
This week we anticipated one of the biggest event of Bitcoin, the halving.
As mentioned on our previous article the BTC reward reduction is having a significant effect on the hash rate as it fell from 135mTH/s on the day of halving to 125 mTH/s, an 8% decrease. This can be explained with one thing – Miner’s purge.
A ton of miners across the globe are loosing money at this time or are at a break even, the only thing that can keep them profitable is a higher BTC price. – Most of these miners are operating on countries with higher cost of electricity.
If we take a look at the pre halving breakeven data with miners and electricity cost – you can tell that now with halving not only the BTC rewards are squashed in half but also the costs of the mining operation are doubled.
Only those miners that are operating from countries where the cost of electricity is so low compared to the countries around the globe such as China are profitable at this moment.
The only thing that will keep miners in the business is a higher BTC price, but is there enough buying pressure ?
If the price of BTC will not increase the majority of miners will be forced to sell the coins they mined which will further increase the selling pressure.
The CoinShare CSO said this about their observation on miners: “ I think miners are looking to opportunistically offload some of their Bitcoin inventory to add operating capital to their balance sheet. We’ve been talking to a number of miners on Coinshare’s capital broker dealer side who are looking at raising capital to build out new facilities, to buy new machines and to extend out their capacity.”
So if they decide to sell their holdings – selling pressure increases – BTC price goes down. .
From the technical point we haven’t changed much since last week.
9500-10500 Key area: This is by far the most important zone at this moment. This is the zone where most of the selling pressure is coming from and as you can see we’ve had multiple reversals from this zone and we’ve failed multiple times to break above.
Trend Line : The descending trend-line is another added confluence that adds strength to the 9500 key level. —we’ve been respecting this trend line numerous of times.
Chart patterns : If we combine the key level and the trend-line you can clearly see a pattern there. We’re still on a downtrend, and we’ve been forming lower-lows and lower-highs for quite some time now. Unless we break above the last lower high (10500), BTC will continue the trend downwards to form another lower low from the current lower high.
Conclusion: Fundamentally, we are in a critical state as the majority of the miners could be out of the business, and this will result with a big U turn back to the downside for BTC.
Technically, we are now trading at a very important resistance level which also indicates that a downside push should be underway. However, we’ve been testing 9500 resistance multiple times and each time we test it the resistance gets weaker. That’s why we will be closely monitoring how price reacts once it re-tests the 9500/10500 liquidity area.
As mentioned we will continue being on a bear trend until BTC breaks through this area and takes out the previous LH at 10500 in order to change the trend.
This week we anticipated one of the biggest event of Bitcoin, the halving.
As mentioned on our previous article the BTC reward reduction is having a significant effect on the hash rate as it fell from 135mTH/s on the day of halving to 125 mTH/s, an 8% decrease. This can be explained with one thing – Miner’s purge.
A ton of miners across the globe are loosing money at this time or are at a break even, the only thing that can keep them profitable is a higher BTC price. – Most of these miners are operating on countries with higher cost of electricity.
If we take a look at the pre halving breakeven data with miners and electricity cost – you can tell that now with halving not only the BTC rewards are squashed in half but also the costs of the mining operation are doubled.
Only those miners that are operating from countries where the cost of electricity is so low compared to the countries around the globe such as China are profitable at this moment.
The only thing that will keep miners in the business is a higher BTC price, but is there enough buying pressure ?
If the price of BTC will not increase the majority of miners will be forced to sell the coins they mined which will further increase the selling pressure.
The CoinShare CSO said this about their observation on miners: “ I think miners are looking to opportunistically offload some of their Bitcoin inventory to add operating capital to their balance sheet. We’ve been talking to a number of miners on Coinshare’s capital broker dealer side who are looking at raising capital to build out new facilities, to buy new machines and to extend out their capacity.”
So if they decide to sell their holdings – selling pressure increases – BTC price goes down. .
From the technical point we haven’t changed much since last week.
9500-10500 Key area: This is by far the most important zone at this moment. This is the zone where most of the selling pressure is coming from and as you can see we’ve had multiple reversals from this zone and we’ve failed multiple times to break above.
Trend Line : The descending trend-line is another added confluence that adds strength to the 9500 key level. —we’ve been respecting this trend line numerous of times.
Chart patterns : If we combine the key level and the trend-line you can clearly see a pattern there. We’re still on a downtrend, and we’ve been forming lower-lows and lower-highs for quite some time now. Unless we break above the last lower high (10500), BTC will continue the trend downwards to form another lower low from the current lower high.
Conclusion: Fundamentally, we are in a critical state as the majority of the miners could be out of the business, and this will result with a big U turn back to the downside for BTC.
Technically, we are now trading at a very important resistance level which also indicates that a downside push should be underway. However, we’ve been testing 9500 resistance multiple times and each time we test it the resistance gets weaker. That’s why we will be closely monitoring how price reacts once it re-tests the 9500/10500 liquidity area.
As mentioned we will continue being on a bear trend until BTC breaks through this area and takes out the previous LH at 10500 in order to change the trend.
