BTC fell below 365 Day Moving Average, Miners still bet big on Halving

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By Robbie Liu   2019/12/13

Quick Overview:

  • Bitcoin miners bet big on halving
  • Federal Reserve keeps the rate unchanged
  • Bitcoin fell below the 365 Day Moving Average

Introduction

Traders still struggling in the crypto market these days can feel the sluggish trading volume and the fading enthusiasm among participants. Looking at the global crypto trading volume, China is still barely active, but the USD market’s trading volume fell by 20% in November, which also confirms the lack of buyer demand. You can even see the decline in liquidity and the increase in slippage even in the derivatives markets. Funds entry from USD market was an important reason for the strong Bitcoin price rise in the first half of this year. With the market still small and no new players joining, it will be difficult for existing players to bring Bitcoin out of the mud. Some analysts calculate that if Bitcoin stays above $8,000 until halving next year, the market needs at least $2.9 billion in inflows to offset the deflationary effect of new Bitcoin entering the system from mining.

Miners are betting big on which Bitcoin’s price will jump next year amid the scheduled halving of mining rewards. Mining machine manufacturer Bitmain started to provide new financial solutions and sales tactics to miners, which include a low prepayment purchase plan and a co-mining tactic to target mining farms. The leveraged sale of new-generation mining machines and the imminent halving will make many small and medium-sized miners out of this market and trigger a sell-off. Inadequate market capacity may lead to a further weakening of the price. The mainstream view in the market is still that the upcoming supply shock will lead to a price increase.

Macro Economics

The Fed’s Open Market Committee keeps the federal funds rate target range unchanged, between 1.5% and 1.75%. Traditional assets such as U.S. stocks, U.S. Treasuries, gold, and crude oil all rose in sync after the announcement, but the news not affected Bitcoin. Earlier this year, the Federal Reserve implemented three consecutive interest rate cuts in response to the global economic slowdown and the impact of the trade war. At December meeting, only four FOMC members are expected to return to the track of interest rate hikes next year, and the remaining 13 members are expected to keep interest rates unchanged next year. Most members believe that the interest rate will remain below 2% in 2021. The US economy is still strong, and the unemployment rate has reached a 50-year low, but inflation has yet to respond.

News

OKEx launched an option simulation board this week, followed by the official launch of BTC options trading at the end of December. And the monthly BTC options products of the US exchange Bakkt also started. A liquid option market is very important for market participants. Traders can use these tools to hedge the risks of certain investment portfolios and to achieve volatility goals through different combinations. Options also allow participants to perform some impossible operations in the futures market, such as betting on future BTC volatility. OKEx has been steadily ramping up its offerings in response to market demand. In November, it started to offer USDT-margined futures trading, closely followed by an announcement of USDT perpetuals.

Eth has completed the Istanbul upgrade, the third upgrade in the year following the hard forks named St. Petersburg and Constantinople in February. ETH plans to complete the conversion from POW to POS by 2021. However, the price of ETH did not respond much to this upgrade, and the market may be tired of the long upgrade path of ETH.

Twitter and Square CEO Jack Dorsey said on Wednesday that Twitter is funding an independent research group to explore open source architectures to create standards for decentralized social networks. In addition, Square, a payment platform, is also one of the major Bitcoin purchase channels in the US market. In the third quarter, 150 million US dollars of Bitcoin were purchased through Square. In recent years, we have seen too many social media using algorithms to generate content recommendation, which interfering people’s attention. Although it may take many years for a perfect scalable and practical decentralized social media standard to be truly established, we are very happy to see that blockchain technology can bring better solutions to give individuals more control over their homepage.

Technical Analysis

The daily closing price fell below the 365-day Moving Average, also called annual line, which is an important long-term bull-bear dividing line in the market. It shows that long-term investors’ attitude towards Bitcoin remain bearish.

A repeated rejection from $7,600 created many long upper wicks, which shows the supply is still strong, and the price cannot stay high for too long. In mid-2018, after BTC finally fell below the annual line, it experienced over 300 days under this moving average. At that time, the price of dropped from $ 7600 to $ 3000.

The $ 7,100 support is more and more likely to break. The upper side resistance is around $ 7,280. If price cannot hold above $7,280, short is still a better strategy. But a firm breakout above $ 7,280 means that the short-term downtrend would be broken, and the probability of short-term reversal will increase.

Figure 1: OKEx BTC quarterly future 1D – 2018/1/1 to 2019/12/12 – Tradingview

Sentiment Analysis

According to the on-chain statistics monitoring website TokenAnalyst, a total of $ 137 million in BTC and $ 13 million in ETH flowed into the exchange in the past week, which indicates that traders have actively sold coins in the market. The trading activity of most stablecoins this week has also declined, which indicates the market is bearish. Cryptocurrency outflows from exchanges can reduce market supply, while stablecoin flows into exchanges increase demand.

According to OKEx which can help investors to better judge the market and make better trading decisions, BTC Long/Short ratio is hovering around 1.2. As the new quarterly contract is alive this afternoon, the current quarterly contract premium is around $70, which shows some enthusiastic sentiment.

Figure 2: OKEx Trading Data BTC Basis – 2019/12/6 to 2019/12/13 – OKEx

Happy Trading.

Disclaimer: Trading digital assets involves significant risk and can result in the loss of your invested capital. You should ensure that you understand the risk involved and take into consideration your level of experience, investment objectives and seek independent financial advice if necessary.

This article is published on BitPinas: [OKEx Weekly Review & Outlook]: BTC fell below 365 Day Moving Average, Miners still bet big on Halving


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