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Lost Or Held Bitcoin Are Now Outpacing New Circulating Coins

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Bitcoin is once again trading above $11,500 after a retest of $10,000 was quickly bought up. A variety of factors are beginning to have an influence over supply and demand, and appear to be tipping the scales in favor of price appreciation.

One specific metric could be particularly crucial to the increase in value recently, and it could be causing demand to far outweigh any BTC supply available to buyers.

Bitcoin Held Or Lost Coin Metrics Outpace New Circulating Coins

Satoshi Nakamoto designed Bitcoin to be the first peer-to-peer electronic form of cash, but in ten years its become so much more. He also sought to give Bitcoin a sort of collectability, and instill within it the attributes of a rare commodity.

RELATED READING | THIS UNUSUAL BITCOIN ADOPTION METRIC SETS NEW ATH

That design element helps to give Bitcoin a scarcity and rarity that makes it similar to gold, yet due to its all-digital code, more can never be produced once the entire 21 million BTC supply is mined.

Until that happens, new coins are released at a rate or 6.25 BTC roughly every ten minutes per block generation. The current post-halving BTC inflation rate is around 900 BTC per day.

BTC Lost or Hodled Coins | Source: glassnode.com

That means aside from the coins being sold on exchanges – a number that decreases by the day – only 900 BTC are being unlocked each day by miners that are at risk of being sold into the market.

Less Bitcoin sold at market rates, keeps prices growing due to supply and demand. And according to new glassnode data, the amount of BTC “lost” or “hodled” is meanwhile increasing by the day. The current data points to a BTC being held or lost at a rate of 1375 per day, resulting in outpacing the creation of new circulating coins by 385 BTC per day.

Does This Growing Trend Prove Halving-Based Price Appreciation Theories?

The data could very well indicate the start of a bull run brewing due to the offset of supply and demand alone. Not taking into account economic factors, the increase in money supply due to stimulus, and more, could be further fuel for the next rise.

RELATED READING | DATA SHOWS STAGGERING AMOUNT OF BITCOIN SUPPLY HASN’T MOVED IN SEVERAL YEARS

Compared to where Bitcoin was during the last market cycle, the crypto asset is less than a month away from retesting its former all-time high. Or it should be if following the same halving-based trajectory.

bitcoin btcusd supply halving

Halving-Based Market Cycle Theory Prove It Or Lose It Point | Source: BTCUSD on TradingView.com

The chart above acts as a roadmap for what could be the next peak and when Bitcoin gets there, according to the past market cycle alone. The next peak should arrive somewhere around October of next year, suggesting a bull run is starting now. After the next peak of roughly $300,000 per BTC, the crypto asset could fall another 80% back to roughly $50,000.

But again, there’s only a small sample size to go off of, so the leading cryptocurrency by market cap is at a ‘prove it or lose it’ moment when it comes to the stock-to-flow model and other halving-based four-year cycle theories.

Featured image from Deposit Photos, Charts from TradingView & glassnode



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Bitcoin derivatives data shows pro traders ignored today’s $41K pump

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Sometimes all Bitcoin (BTC) needs to pump 10% is a positive remark from someone like Elon Musk.

The Tesla CEO has been pointed to as the culprit for the recent downturn after the company’s May 12 announcement explaining that it would no longer accept Bitcoin payments due to environmental concerns. Musk followed up by saying that he was looking into other cryptocurrencies that required 99% less energy consumption. 

However, on June 13, the situation reversed as Musk reassured the public that Tesla did not sell any additional Bitcoin. The post also said that the electric-car producer would resume taking BTC payments as soon as its Bitcoin mining relied on a minimum of 50% clean energy.

In bear markets, top traders act with caution

While retail investors and algorithmic trading bots jump into action as soon as bullish or bearish signals and news flash, top traders tend to act more with more caution. Those who have been around the crypto markets long enough know that positive news might end up being ignored or severely downplayed in bear markets.

On the other hand, even potentially negative news seems to have little to no impact during bull runs. For example, on Sept. 26, 2020, Kucoin was hacked for $150 million. The following week, on Oct. 1, the United States Commodity Futures Trading Commission charged BitMEX for operating an unregistered trading platform and violating Anti-Money Laundering regulations.

Two weeks later, police reportedly questioned the founder of OKEx, forcing the exchange to suspend crypto withdrawals. Had this series of negative news happened while Bitcoin was flat or in a bearish phase, the price would have undoubtedly have stalled during a bear market.

Bitcoin price at Coinbase in USD, Sept. 2020. Source: TradingView

As shown above, Bitcoin barely had any negative impact in late September and October 2020. In fact, by the end of November 2020, Bitcoin was up 74% in two months. This is the main reason why top traders tend to ignore positive news during bear markets and vice-versa.

The 3-month futures premium is neutral

A futures contract seller will usually demand a price premium to regular spot exchanges. This situation is not exclusive to crypto markets and happens in every derivatives market because in addition to the exchange liquidity risk, the seller is postponing settlement and this results in a higher price.

The 3-month futures premium (basis rate) usually trades at a 5% to 15% annualized premium in healthy markets. When futures are trading below the regular spot exchange price, it signals a short-term bearish sentiment.

Huobi 3-month Bitcoin futures basis. Source: Skew

As shown above, the future basis has been below 11% since May 20 and flirting with bearish territory on multiple occasions as it tested 5%. The current level indicates a neutral position from top traders.

The options skew is no longer signaling fear

The 25% delta skew compares similar call (buy) and put (sell) options side-by-side. It will turn positive when the protective put options premium is higher than similar risk call options.

The opposite holds when market makers are bullish and this causes the 25% delta skew indicator to enter the negative range.

Deribit Bitcoin options 25% delta skew. Source: laevitas.ch

The above chart confirms that top traders, including arbitrage desks and market markers, are currently uncomfortable with Bitcoin price as the neutral-to-bearish put options premium is higher. However, the current 7% positive skew is far from the 20% exaggerated fear seen in late May.

Derivatives markets show no evidence of top traders getting excited about the recent $40,000 hike. On the bright side, there is room for leverage buyers to mount positions. Stronger upswings usually occur when investors are least expecting, and the current scenario seems to be a perfect example.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.