BTC above the 10-hour but below the 50-hour moving averages on the hourly chart, a sideways signal for market technicians.
Bitcoin’s price fell Tuesday, going as low as $30,875 around 15:00 UTC (10 a.m. ET) before coming back up, changing hands around $32,003.
The drop occurred after the world’s oldest cryptocurrency reached nearly $35,000 on Monday, noted Constantine Kogan, partner at investment firm Wave Financial, who is also bearish on current market conditions. “I expect a decline to $29,000,” he told CoinDesk. “Apparently some of the holders and whales sold off their positions.”
Kogan noted some positive news this week that didn’t move the bitcoin market much. “Marathon has invested $150 million in bitcoin and intends to become the largest miner in the world,” he said. “Crypto funds are raising records, but there was no growth at the same time.”
The last time bitcoin was over $35,000 was almost a week ago on Jan. 20, according to CoinDesk 20 data.
“Many crypto natives and macro traders were anticipating a ~30% pullback off the all-time high from two weeks ago,” noted Brian Mosoff, chief executive officer for investment firm Ether Capital. “Now that it seems to have stabilized in the low $30,000s, traders are treating this as an opportunity to lever up and go long ahead of the next leg up.”
Tuesday looked like a fairly priced day for long bitcoin leverage, as funding rates dipped a bit from Monday. That was a change from the excitement over the past 90 days, when margin rates could go as over 0.2% on some venues during the crazy price run-up to Jan. 10’s all-time high of $40,986.
Some are using bitcoin’s valuation relative to other cryptocurrencies as a signal for what’s ahead in the market.
“I have a strong sentiment towards ether as a leading indicator for an upcoming alt season,” Global Digital Asset Chief Operating Officer Zachary Friedman told CoinDesk, referring to market conditions that favor “alts” or alternative cryptocurrencies.
Friedman pointed out that bitcoin’s dominance, its share as a percentage of the total crypto market cap, is falling. Indeed, since the start of 2021, bitcoin dominance has fallen more than 10%.
“BTC dominance is dropping as profits are redistributed and ETH sitting just near its all-time high presents an immediate opportunity for new market entrants to diversify their holdings and seek additional yields,” Friedman added.
Bitcoin flows back into decentralized finance
Ether (ETH), the second-largest cryptocurrency by market capitalization, was down Tuesday trading around $1,340 and slipping 2.2% in 24 hours as of 21:00 UTC (4:00 p.m. ET).
On Monday the amount of bitcoin held in decentralized finance, or DeFi, crossed back over 40,000 BTC for the first time since mid-December. As of press time, 42,604 BTC were “locked” in DeFi, which investors do to obtain a “yield” in exchange for providing liquidity.
Ether Capital’s Mosoff says the rotation back into DeFi is simply investors chasing juicier opportunities as the market for bitcoin seems to be in a lull.
“Holders are anticipating ‘alt season’, and want to use their bitcoin to leverage additional exposure to other opportunities within the crypto space, whether it be DeFi tokens or other layer 1s such as Ethereum, Polkadot, Solana, NEAR, etc.,” Mosoff said. “Many of these projects have a lot of momentum at the moment and are well positioned for investor participation.”
Digital assets on the CoinDesk 20 are mostly red Tuesday. Notable winners as of 21:00 UTC (4:00 p.m. ET):
Oil was down 0.66%. Price per barrel of West Texas Intermediate crude: $52.50.
Gold was in the red 0.23% and at $1,851 as of press time.
The 10-year U.S. Treasury bond yield climbed Tuesday to 1.038 and in the green 0.84%.
Cashing Out Bitcoin Using ATMs: Popular Youtuber Successfully Turns $16K in BTC Into Cash
On January 23, 2021, the popular Youtuber Mambafx published a video of himself withdrawing $16,000 in cash from bitcoin ATMs. The video shows how it took multiple bitcoin ATMs to complete the process but by the end of the 17-minute film, Mambafx withdrew over $16k by selling bitcoin to the automated teller machines.
Mambafx is a popular popular trader on Youtube and various social media outlets. Just recently, he filmed a video about cashing out some bitcoin. In a previous Youtube video, Mambafx showed how difficult it was to cash out $5k in bitcoin (BTC) by leveraging cryptocurrency ATMs in his region. In his latest video shared with 86,000 channel subscribers, Mambafx successfully cashes out over $16k in bitcoin.
Of course, the process of cashing out $16,000 worth of bitcoin and turning it into cash wasn’t easy. Even at the very first bitcoin ATM Mambafx visited that allows individuals to sell bitcoin said that it would let him take $15k. However, after reading the machine’s terms of service (ToS), Mambafx was only allowed to take out $2,900 in cash and all of it in $20 bills.
The trader also told his Youtube subscribers how BTC’s price was on a tear and he had made a few thousand dollars extra before cashing out. Further, Mambafx said that he may even attempt to do a $100k withdrawal next and asked his fans if people would like to see that video in the future.
Despite the success in withdrawing $16k, Mambafx said he suffered “10% losses on these withdrawals” when using these bitcoin ATMs. Just before visiting the first bitcoin ATM Mambafx said: “So we’re gonna go into the mall, hopefully smoothly withdraw $20k, very f***ing unlikely, but we’re gonna try and see how many of the ATMs we gotta go to.”
By the length of the 17 minute+ video, viewers can watch Mambafx being forced to stop at a myriad of bitcoin ATMs in order to stack $16k in cash. Interestingly, the machines only spit out 20 dollar bills and at one point while withdrawing $3k, Mambafx thought the money would get stuck in the slot.
By the end of the video, Mambafx managed to extract approximately $16,440 after using his smartphone app to find all the two-way bitcoin ATMs that would allow him to sell BTC. Despite paying a whopping 10% fee per withdrawal at the end of the video his bag was filled with an enormous amount of $20 bills. It’s likely the well known Youtuber probably paid a few bucks for BTC network fees as well. The video also highlighted the fact that Mambafx had to wait a long time for network confirmations. The video shows Mambafx did manage to get a small amount of $100 bills during the process.
The two-way ATM often requires a single confirmation or more on the BTC network and it gives the customer a voucher in order to retrieve the cash after a confirmation completes. Mambafx sat around quite often waiting for the network confirmation and then withdrew his cash after the fact with his voucher. It definitely is a precaution for protecting the ATM from a replace-by-fee (RBF) scam, but makes for a long video of waiting when someone like Mambafx wants to withdraw $16k.
Selling $100k worth of bitcoin to crypto ATMs in order to withdraw all that cash could take an extremely long time for Mambafx to accomplish.
What do you think about Mambafx successfully selling $16k worth of bitcoin for cash? Let us know what you think about this subject in the comments section below.
Image Credits: Shutterstock, Pixabay, Wiki Commons, Youtube, Mambafx,
Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.
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Do you want to know more about Mining City community?
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Over the last few weeks, the price of bitcoin has hit a record high of more than $41,000, blowing past the 2017 bubble high point of $19,783. The price has since declined relatively rapidly, and questions have arisen about what’s next for this latest bubble. This presents an opportune moment to analyze why these bubbles form and what they mean for the future of bitcoin.
Price volatility causes market uncertainty and is often viewed as detrimental. However, for bitcoin, the price volatility – such as this recent bubble and past ones of varying sizes in 2017 and 2019 – can be ultimately beneficial for the future of cryptocurrencies, because it promotes wider adoption of this up and coming technology.
Yanhao “Max” Wei is an assistant professor of marketing at USC Marshall School of Business.
In some sense, bubbles, which we are defining as a price surge that experiences a decline afterward and then stabilizes at a lower level, essentially becomes free advertising for bitcoin. Headlines splash across major mainstream media outlets about the rising price. Social media buzz begins to build. Soon, people start wondering about bitcoin and whether they should get in on the action.
This phenomenon was borne out in research I conducted with my USC Marshall colleague Anthony Dukes, blending standard models of product diffusion with macro-financial economics to identify a new view of currency speculation.
The models showed us that price bubbles and user adoption can reinforce each other in a cryptocurrency market. In fact, Google searches for bitcoin peaked at the same time that bubbles were peaking in November 2013 and December 2017. The largest jump happened in 2017, around the time of the largest price bubble in bitcoin history prior to this most recent one. During this current bubble, we’re already seeing the start of a surge in Google trends for searches of the terms “bitcoin” and “blockchain.”
People’s interest – reflected in the volume of the Google search – surged as the bitcoin price surged. Our research notes that these surges in attention are connected to events that alter people’s ability to use bitcoin, such as the introduction of the Shared Coin service in November of 2013, which offered anonymity in transactions.
Further, if we look at the historical number of bitcoin wallet accounts, we see there was much steeper growth in the number of accounts around December 2017, which matches the peak in the Google trend. This peak in attention corresponds in time with decisions by Japan, Russia and Norway to recognize bitcoin as a legitimate currency.
This accelerated interest and adoption has a big impact on the price of bitcoin. To more users, bitcoin better serves as a medium of exchange, which in turn attracts even more people to use bitcoin. The expectation of growth attracts investors to bitcoin and drives up its price.
It becomes a reinforcing loop where price bubbles accelerate the growth of the bitcoin user base, the expectation of which then fuels the price bubble. The question of why bitcoin price has been so volatile should be answered with this reinforcement in mind.
Essentially, the spotlight on bitcoin bubbles is beneficial because the influx of investors helps make the currency more liquid – more widely accepted as payment and easier to be quickly exchanged. The lack of liquidity is one of the biggest obstacles for a new currency to be adopted.
The novelty of a price surge is likely important. As the price newly started to rise, more people heard about bitcoin and were interested enough to create a wallet account. If the price increase wasn’t a novelty, it wouldn’t have attracted the same level of excitement and attention. Compare this to when a brand introduces limited edition shoes, and the hype surrounding the “drop” gets attention in and of itself.
Aside from bitcoin itself, the attention on the big price bubbles very likely has sped up the diffusion of the promising technology that powers bitcoin, namely the blockchain, which holds promise for many applications beyond cryptocurrencies. Essentially a technology to secure any type of data or records, blockchain is being applied in supply chain, real estate, health care and many more sectors.
Scholars have tended to look at the price bubbles and the user adoption as two separate issues – as either a finance or a marketing issue. Our research raises the importance of the two interacting with each other. The infamous price volatility and bubbles may very well be embraced by bitcoin advocates, as these help expand the universe of bitcoin users and where the currency can be used.
Bitcoin’s price dropped as much as 10% during early trading hours on Tuesday as bitcoin miners started selling a large amount of the cryptocurrency for the first time since October. There is not enough demand to absorb the additional coins on the market because institutions want an idea of how the new Biden Administration will view bitcoin and other cryptocurrencies.
At the press time, bitcoin was trading at $32,254.59, down 3.04% in the past 24 hours, according to CoinDesk’s BPI. The price went as low as nearly $30,000 after markets opened in the U.S. on Tuesday.
Bitcoin miners’ position index, a ratio of the number of bitcoin leaving all miners’ wallets to that number’s one-year moving average, reached an eight-year high last week and is still above 2.0, according to data from on-chain analytics firm CryptoQuant. Any value above 2.0 indicates that most miners are selling.
Miners appear to have been selling in order to meet some of their operational costs.
“For the first time in a while, it appears miners sold some fairly substantial holdings to raise cash as we expected on a rally after October,” Neil Van Huis, director of sales and institutional trading at Blockfills, told CoinDesk. “With a need to allocate capital to more (and newer) mining rigs, taking bitcoin off of their balance sheet for cash at three or four times higher prices 30-60 days after the wet season ended in China was about the best scenario [miners] could’ve asked for.”
Not enough buyers
While miners continue selling bitcoin, it seems there aren’t enough buyers, especially from the institutional investors, to meet the sell side.
The “Coinbase premium,” the gap between Coinbase’s BTC/USD pair and Binance’s BTC/USDT pair involving the tether stablecoin, has not shown strong or consistent numbers above $50 after it went negative last week, according to data from CryptoQuant.
When this metric goes above $50, it usually indicates stronger spot buying pressure from Coinbase, CryptoQuant Chief Executive Ki Young Ju told CoinDesk. And when there are no USD spot inflows, the premium goes down.
Meanwhile, all stablecoins reserved on all exchanges hit a new all-time high on CryptoQuant’ tracker. This, coupled with no U.S. dollar spot inflows, means the current market is predominantly driven by crypto natives such as crypto hedge funds and market makers. Such market participants are more comfortable with buying and selling bitcoin with stablecoins, Ki said.
“If there’s no spot USD inflows, no more bull runs,” Ki added.
Institutions wait and see
Institutions are pressing the pause button on their bitcoin purchases partly because many are trying to get a read from the new Biden administration’s attitude towards crypto-related policies and regulations. Negative comments on cryptocurrencies from new Treasury Secretary Janet Yellen have raised some worries around possible added controls over the crypto markets.
Institutions “are still trying to gauge where this administration would be on crypto and if it won’t be too negative, meaning that the fear of aggressive regulations or flat-out bans would be lifted, then I think we would see a new wave of institutions coming into the space,” Guy Hirsch, U.S. managing director for multi-asset brokerage eToro, told CoinDesk.
Fear of the Wall Street Beats Redditors
Some retail traders are hoping what happened with GameStop Corp.’s volatile stock rally this week isn’t repeated with bitcoin. In GameStop’s case, “a band of Redditors and Discord users squeezed the life out of their GameStop shorts by quadrupling share prices,” Adam James, senior editor at OKEx Insights, the research arm of crypto exchange OKEx, said.
He added, “The realization that the legacy markets might not be what they used to be in the new stay-at-home paradigm [could] be affecting the bitcoin and cryptocurrency market, though I wouldn’t exactly say they are bearish for the crypto markets.”
That said, some traders and analysts have remained positive on the markets despite the short-term market volatility.
“With bitcoin being unable to reclaim [previous] highs, some are losing faith,” Bendik Norheim Schei, head of research at the Norwegian cryptocurrency analysis firm Arcane Research, told CoinDesk. “That is probably something they will regret later this year. Bitcoin is volatile, that’s part of the game with a new and emerging asset.”
Chris Thomas, head of digital asset at Swissquote, told CoinDesk his company saw a support level setting at around $30,000, a level previously received “decent” support from buyers.
“For sellers who are not very speculative, it does not make sense to sell out around this level,” Thomas said.
Fractal Suggests Ethereum has Room to Fall Before Bulls Can Spark Next Uptrend
Ethereum has seen some notable momentum in recent days that has allowed its price to set fresh all-time highs
Each break above its previous all-time highs around $1,450 has been fleeting, however, which is a grave sign that could mean downside is imminent
For now, ETH’s price action remains firmly correlated to that of Bitcoin, with the benchmark cryptocurrency seeing some turbulence that has shaken its market structure
One analyst is now pointing to a fractal pattern for guidance on where ETH might trend next
This fractal suggests that a move towards a key trendline at $1,100 may come about in the short-term
Ethereum has been struggling to maintain any upwards momentum due to Bitcoin’s recent turbulence.
The benchmark cryptocurrency has caused ETH and most other altcoins to lose their recently gained momentum, as it has been slowly grinding lower ever since it broke below $40,000 a few weeks ago.
One analyst is now pointing to some striking similarities between this latest Ethereum rally and one seen previously, which could indicate that its decline will cut deeper in the short-term.
Ethereum Struggles to Uphold Momentum as BTC Breaks Down
Bitcoin has seen some choppy trading throughout the past few days and weeks, with the selling pressure seen in the mid-$30,000 region causing it to see some notable rejections.
This has hampered Ethereum’s price action as well. At the time of writing, ETH is trading down over 4% at its current price of $1,270. This marks a notable dip from where it was just a few days ago when it set highs of $1,470.
Each time ETH has broken above its all-time highs, BTC’s weakness has hampered its growth and has led to further downside.
This Fractal Suggests ETH Will Tap $1,100 Before Rallying Higher
Ethereum saw a massive selloff less than a week ago that sent its price down to lows of $1,060.
One analyst believes that it may trend towards these lows in the near-term, pointing to a fractal that suggests downside is imminent.
As seen in the below chart, this pattern indicates that a move towards a trendline in the $1,100 region could come about in the next few days, with a rebound here potentially marking another higher-low.
Bitcoin’s price action will be vital to understanding that of Ethereum and most other digital assets. As such, its continued reaction to the support at $31,000 should shed some light on where the market will trend next.