Play a long game.No direction and low volume conditions… | Author: Auros Tech | Capital | July 2021
The situation of non-directionality and low transaction volume continues to exist in the entire cryptocurrency field
in In recent weeks, Bitcoin and the broader cryptocurrency complex have shown greater weakness. As the market continues to absorb the two main bearish drivers, the price trend of BTC has not continued to enter its recent 30-40k range. High-end: (i) The mining industry has suffered tremendous damage because China has banned almost all mining operations within its borders; (ii) Signs of increased regulatory pressure threaten all sectors of the industry.
The selling pressure of Chinese miners to liquidate their holdings to fund closures and possible business relocations is undoubtedly a reasonable reason for the current price trend, as are market participants’ concerns about these lower prices and halving the hash rate, leading to expectations The reduction in network security provided by this hash rate. Over time, these two factors will definitely disappear, and we fully expect the hash rate to rebound with the reorganization of the supply chain and the capacity of facilities in more favorable jurisdictions.
Interestingly, most of the losses in recent weeks have come from impatient short-term holders who sold at a loss, as shown in the above-mentioned short-term holder-used output profit rate (SOPR) chart, which calculates When compared with the time spent later, a UTXO was created. An output ratio below 1 indicates a loss. The losses in recent days are comparable to the large-scale Covid liquidation incident in March 2020.Warren Buffett once said a famous saying, The stock market is a tool to transfer money from impatient people to patient people.…We think the same applies to almost all asset classes, including cryptocurrencies.
Superimposing the above narrative and on-chain indicators (which have not performed well in recent months) with some traditional technical analysis, we can see that both RSI and LMACD are still showing a downward trend. Extrapolating the trajectory of these indicators, one can expect that the current weakness will continue throughout the summer, and as the market correctly tests the effectiveness of the inventory flow model, an interesting fourth quarter may be established. Until the momentum breaks up (the green trend line below), the bull market situation may be re-established.
So, all in all, the price pressure in recent weeks seems to have been driven by short-term holders’ awareness of losses and surrenders and the background of relevant Chinese mining news. From TA’s point of view, this bearish cycle does not seem to be over yet. The call for about $20,000 in Bitcoin may still be answered, but we are still more constructive than this and expect important support near key 27 – 29k range.
For the above short-term holders and many newcomers in the market, a considerable challenge is that most people do not have enough in-depth understanding of the role here. Technology adoption is an investor’s game, and we need to be able to go beyond the hourly chart to form independent opinions and opinions on the progress of technology adoption and its possible future. In addition, true belief requires a deep understanding of value drivers-it is difficult to do this with technical analysis alone, let alone the fanatical short-termism we observe in the field of digital assets today.
NYDIG is an example of a company that understands the Bitcoin investment case. We have discussed in this week how NYDIG can take positive actions to build a Bitcoin-only platform for institutional investors. The recently released development that focuses on opening up its platform to the huge US retail market is very promising. It is worth paying attention to NYDIG’s actions, because this development in the industry has very real potential and will not only affect the current horizontal price trend, but also affect long-term adoption and prices.
Although we certainly do not doubt the contribution of Michael Saylor and MicroStrategy to the market, this concentration of shareholder value—focusing on making more than one asset, coupled with religious belief in Saylor’s views, may lead to conservative capital and service providers Discouraged. When your company is almost 100% exposed to the rise and fall of one of the most volatile assets in existence, it is difficult to look credible in the institutional world.Fanatics are often considered Unwelcome person Traditional finance.
NYDIG is practicing their long-term belief in Bitcoin and has been quietly building the back-end infrastructure needed to access the entire U.S. financial market and other regions. Their goal does not seem to be an educational goal, but a series of public appearances to promote Bitcoin and its many pioneering features, just like Thaler. Like most institutional investors, they will not advertise to the market how investors should use leverage to buy Bitcoin or promote their investment positions. Companies such as NYDIG and Fidelity have institutional credibility and can interact with certain parts of the financial system, which has a real impact on how the traditional American financial system (initially) seamlessly accesses Bitcoin without having to move out of its traditional banking infrastructure. From an investment point of view, the actions of long-term institutional capital allocators are good signals worthy of attention.
Traders and speculators should pay attention to the recent collaboration between NYDIG and Q2 Holdings, a US listed company that provides secure, cloud-based virtual banking solutions for approximately 30% of US banks and credit unions. NYDIG’s institutional influence is critical to bringing these collaborations together, which will open up mass adoption in the United States and beyond. Once integrated, NYDIG and Q2 will provide 18 million new users with the ability to buy, sell and hold Bitcoin within the existing financial system. From another perspective, about 1/3 of Coinbase customers can access Bitcoin services directly from their bank accounts.
Shortly before the announcement of Q2, NYDIG also quietly began to integrate with Fiserv. Fiserv is very similar to Q2 and will now provide Bitcoin investment services to a large number of customers served by Fiserv’s technology stack. In addition to allowing customers who use Fiserv technology to access Bitcoin, the cooperation will also aim to bring a Bitcoin-based reward program to their customers. Pay interest in Bitcoin? Cash back with Bitcoin? As we recently saw in Coinbase’s USDC interest account, the income that can be generated in the crypto ecosystem is entering the traditional financial sector.
Both of these news stories have important implications for the adoption of the US retail industry, and may trigger demand shocks to get cryptocurrencies out of the current panic, but stories like this one do seem to be underestimated. Back-end technology integration is not sexy at all… Saylor’s $1 billion VWAP order or Elon’s dog-themed meme coin’s perennial shilling provides more attractive clickbait, so naturally, this is often the market Talking about drinking fountains. But don’t get me wrong, for many people, the real added value is largely hidden.
The progress in integrating Bitcoin and crypto-related services into traditional finance is certainly encouraging. Seeing news of bullish price movements and welcoming it, but crypto purists naturally pay attention to what can be built into more valuable walls. The garden was pulled into the existing regulated financial system and held by a regulated custodian rather than an individual. We don’t doubt that Robert Guttmen and Ross Steven of NYDIG know Bitcoin very well, but we encourage Saylor’s Internet Hornet swarm to hold them accountable for the freedom-based ideology that is arguably the greatest technological invention of the 20th century. Cryptocurrency must empower sovereign individuals, and we better be careful not to accidentally rebuild a copy of the existing financial system.