mining

Chinese chip designer reportedly filed for $50M Nasdaq IPO

Chinese mining chip designer Nano Labs has applied for an initial public offering (IPO) in the United States to raise $50 million on Nasdaq amid sluggish market conditions.

Chinese mining chip designer Nano Labs has applied for an initial public offering (IPO) in the United States to raise $50 million on Nasdaq amid sluggish market conditions.

According to information obtained by the Renaissance Capital IPO monitoring tool, the Huangzhou-based crypto mining chip maker has filed with the regulator, the U.S. Securities and Exchange Commission (SEC), for its upcoming public offering on Nasdaq, the world’s second-larges stock exchange.

The application for American depository shares is occurring amid a slew of regulatory difficulties in China and the United States, causing a shortage of Chinese issuers’ overseas fundraising. Only two IPOs took place in 2022 in New York, raising $49.5 million, compared to 28 IPOs, which raised $5.8 billion last year.

Nano Labs, however, is pressing ahead with its Nasdaq offering even though it has yet to produce a viable product. The firm plans to transform into a metaverse business, providing computing power for gaming and entertainment.

A metaverse is a new online environment being developed on the blockchain. Users may create avatars and own digital property in these virtual realms, sometimes referred to as “next-generation internet” or Web3 applications.

The two main shareholders of Nano Labs are co-founders Kong and Sun Qifeng, with 32.8% and 22.3% stakes, respectively. Kong was previously the co-chairman and a director at rival Canaan, which became the first cryptocurrency-mining rig maker to list in the U.S. in November 2019. In August 2020, he departed Canaan amid a corporate power struggle, according to reports from China then.

Nano Labs’ products are used to mine cryptocurrencies such as Bitcoin (BTC), Ether (ETH) and Filecoin (FIL). In 2020, the company’s earnings were derived solely from China-based clients. To expand sales overseas, it established a subsidiary in Singapore last year.

Related: Celsius Network’s crypto mining subsidiary SEC filing suggests plans for IPO

After Beijing cracked down on crypto activities in May 2021, China, which was previously the world’s biggest cryptocurrency mining location, witnessed some activities being pushed underground. In July last year, the hash rate, a metric of the network’s computing power for validating transactions and creating new digital assets, briefly went to zero.

Even if the IPO is a success, Nano Labs faces the danger of being delisted. If a U.S. audit regulator fails to examine Chinese accounts for three years, mainland Chinese firms may be delisted from American markets by 2023. Nano Labs claimed it would face this problem as a result of auditing work done by its accounting firm’s offices in China.

Old Bitcoin mining rigs risk ‘shutdown’ after BTC price slips under $24K

New generation Bitcoin mining machines would remain profitable even if the BTC price crashes by another 50%.

Older Bitcoin (BTC) mining rigs are finding it difficult to generate positive revenues during the ongoing crypto market decline.

75% drop in Bitcoin mining profitability

The profitability of many Application Specific Integrated Circuit (ASIC) machines has dropped into the negative zone after Bitcoin’s fall below $24,000 this June 13, data fetched by F2Pool shows. Those machines include Antminer S11 and AvalonMiner 921, which are now close to their “shutdown price.”

Notably, Bitmain’s Antminer S11 offers a maximum hash rate of 20.5 Terra-hash per second (TH/s) for a power consumption of 1,530 watts.

The cost of running an Antiminer 211 is 0.13 kilowatts per hour (KW/h) based on the global average electricity cost. As a result, it would consume around $4.5 worth of power every day versus the roughly $2 income in the same period, according to data gathered by ASIC Miner Value.

The profitability of Antminer S11 as of June 13, 2022. Source: Bitmain

Similarly, the cost of running Canaan’s AvalonMiner 921 comes to be around $5 per day compared to its income of over $2 in the same period.

Overall, Bitcoin miners’ earnings have dropped from $0.412 per TH/s/day in October 2021 to $0.11 per TH/s/day in June 2022, according to the “Bitcoin Hashprice Index” — a 75% decline in eight months. 

Bitcoin Hashprice Index one-year chart. Source: Hashrate Index

The losses coincided with a sharp decline in the Bitcoin mining hash rate in the last seven days — from an all-time high of 239.15 exa-hash per second (EH/s) on June 6 to 189.72 EH/s on June 13, according to data from CoinWarz.

Bitcoin hashrate data in last 12 months. Source: CoinWarz

This suggests that miners are limiting their BTC production capacity by theoretically shutting down unprofitable mining rigs and may continue in the coming weeks if Bitcoin fails to recover above $25,000 and/or the mining difficulty adjusts. 

Bitcoin mining stocks suffer

On June 13, Bitcoin price hit its lowest levels since December 2020 following a brutal crypto market selloff.

BTC’s price reached as low as $23,707 (data from Coinbase) versus its November 2021’s peak of $69,000. The losses came due to the concerns about rising U.S. interest rates.

BTC/USD daily price chart. Source: TradingView

Bitcoin mining businesses, which remain at the forefront of minting and supplying new BTC tokens, have suffered the brunt of falling prices. For example, Canaan’s stock dropped by more than 90% after topping at $39.10 per share in March 2021.

Similarly, VanEck’s Digital Assets Mining ETF (DAM), which opened for business in early March 2022, had lost 63% of its value as of June 10, measured from its record high of $46.05. It looked poised to open June 13 lower, per Nasdaq’s pre-market data.

VanEck Digital Asset Mining ETF daily chart. Source: TradingView

New gen BTC mining rigs still in profit

On a brighter note, some mainstream mining machines still generate profits for miners, hinting their owners would be able to weather the bearish Bitcoin market.

Related: Crypto winter survival guide: Community shares game plan for the bear market

That includes the newly-launched iPollo’s V1, which returns a daily income of around $62 against its $9 power consumption in the same period, and machines from the Antminer’s S-series, which generate daily revenues of $4.75–$18, despite Bitcoin’s below-$25,000 prices.

Nonetheless, some profitable machines are near their shutdown thresholds, including Antminer’s S17+ (73T). It could become unprofitable when BTC’s price drop to $22,000, according to data provided by Bitdeer.

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.

Here’s how blockchains are helping to advance the global energy grid

Governments and environmentalists are quick to criticize the amount of electricity Bitcoin mining uses, but investors’ growing interest in crypto is leading to positive steps in the energy sector.

The blockchain industry’s impact on the energy sector has been a major source of controversy over the past five years. Governments and environmental protection advocates have routinely expressed concerns about the amount of energy required to keep the Bitcoin network secure. Data shows the network’s energy consumption now rivals the yearly energy consumed by some small countries.

Historical Bitcoin network power demand. Source: CCAF

While much of the debate has centered around the negative environmental impacts of Bitcoin (BTC) mining, the drive to maximize earnings from mining and integrate blockchain technology with the energy grid has also introduced new developments that have the potential to be beneficial in the long term.

Here’s a look at several developments that have arisen out of the demand for energy to operate blockchain networks and the positive effects cryptocurrency mining is having on the energy industry.

Recapturing wasted energy

One of the fastest-growing segments of the cryptocurrency mining industry is the monetization of historically wasted sources of energy such as natural gas that is flared at oil drilling facilities.

Discovering natural gas pockets is a common part of the oil drilling industry, and up until recently, this gas was typically burned in a process called “flaring” because the infrastructure needed for its collection was non-existent or there had not been sufficient demand for LNG.

As the value of Bitcoin rose over time, the search for inexpensive energy sources led to the installation of shipping containers filled with mining equipment at drilling sites that can utilize the energy generated from flaring to mine BTC.

While the process still results in carbon dioxide emissions, income is generated during the process and these funds could be redirected toward mitigating environmental concerns.

Most recently, several companies have been exploring the integration of mining via flared gas in the Middle East, which accounted for over 38% of the global flaring in 2020 and presented one of the biggest opportunities to turn wasted energy into value.

Blockchain technology can make energy generation more efficient

A second side-benefit of the push to maximize crypto mining profits is improvements to the energy infrastructure and an increased focus on developing sustainable forms of energy generation.

Studies by the Bitcoin Mining Council have shown that there has been a noticeable increase in the amount of energy derived from sustainable sources, as opposed to sources like oil and coal.

Less developed countries like Kenya and El Salvador have also been able to benefit from improvements in energy generation from sustainable sources like geothermal power plants, which have given their economies an additional source of income.

Whether it’s the utilization of excess power generated by hydroelectric power plants or an increase in the use of wind and solar power, crypto mining is providing a financial incentive to help further optimization of energy efficiency and generation.

Related: Marathon Digital moves Montana BTC mine to pursue carbon neutrality

Smart grid technology

Another energy-related blockchain development is the formation of blockchain-based smart grids that aim to improve energy distribution on a large scale.

Inefficiencies in electricity distribution have largely been traced to the retail level, where smaller firms who own very little of the electrical grid infrastructure mainly provide simple services such as billing and monitoring meter usage.

These types of services can easily be handled by blockchain technology and Internet-of-Things- (IoT)-devices that help consumers bypass retailers and connect directly with wholesale distributors, potentially reducing electricity bills by up to 40%.

Connecting consumers with a smart grid also allows them to shop around with different providers to obtain the best rates possible. This could help to level the playing field in an industry that has historically been dominated by one local energy company.

Projects like Grid+ and Energy Web Token are helping to lead the way in this field as the old grid design of physical substations and monitoring equipment is replaced with a network of distributed energy resources (DERs) that include battery energy storage systems, solar arrays and natural gas generators.

While the sector is still in a nascent phase, it’s a trend worth keeping an eye on because, in the coming years, blockchain technology is bound to be further integrated into the energy sector.

Want more information about trading and investing in crypto markets?

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.

Bitcoin’s real energy use questioned as Ethereum founder criticizes BTC

A founding member of Ethereum has claimed that Bitcoin uses nearly 1% of the world’s electricity, but different sources put it substantially lower.

The ever-raging debate around Bitcoin’s energy consumption has been re-ignited, with founding member of Ethereum Anthony Donofrio claiming that Bitcoin is using “way too much” energy. 

According to figures from Digiconomist, Bitcoin (BTC) currently uses 0.82% of the world’s power while Ethereum (ETH) uses 0.34%. Ethereum researcher Justin Drake posted the figures to his 56,000 followers that Donofrio retweeted, stating:

Ethereum proponents are attempting to take shots at Bitcoin while simultaneously promoting Ethereum’s upcoming transition to proof-of-stake. Drake added another tweet moments later that read: “Ethereum post-merge: 0.000% of world.”

However, the validity of the figures are in doubt.

Even Drake was forced to acknowledge alternative sources of data in a later tweet, which estimated energy consumption figures at nearly 60% lower.

Data sourced from Digiconomist, which markets itself as a platform that “exposes the unintended consequences of digital trends,” has drawn criticism from blockchain industry professionals in the past. The most notable of these is fellow Ethereum developer Josh Stark, who called out the publication for frequently presenting the worst-case scenario when it comes to blockchain technology.

In November last year, Stark published a Twitter thread that questioned the accuracy of Digiconimist’s research methodology. Stark pointed out that almost all of the figures concerning blockchain power consumption were at the “very high end” of any theoretical outcome, especially when compared to more rigorous sources like the University of Cambridge.

Where Digiconomist claims that Bitcoin currently consumes 204 terawatt hours (TWh) worth of electricity per year, the University of Cambridge’s Bitcoin Electricity Consumption Index estimates that Bitcoin’s real consumption is much closer to 125 TWh, a 39% difference.

Related: Are we misguided about Bitcoin mining’s environmental impacts? Slush Pool CMO Kristian Csepcsar explains.

While it may be a well-known fact that Bitcoin’s proof-of-work consensus mechanism is an energy-consuming process, the discussion around just how much power the Bitcoin network actually uses remains a hot-button issue.

According to a report from Cointelegraph, putting a specific number on Bitcoin’s actual power consumption can be quite difficult because of the variation in energy sources that power Bitcoin mining globally.

As of January this year, nearly 60% of global mining operations were reportedly powered by renewable energy sources, and Bitcoin mining operators are rushing to utilize “stranded” natural gas resources that would normally be burned off. Additionally, a report published by CoinShares in January this year found that Bitcoin mining may account for just 0.08% of the world’s total CO2 emissions in 2021.

Sam Tabar, chief security officer of Bit Digital, a publicly-traded Bitcoin mining company, told Cointelegraph that the environmental impact of Bitcoin is frequently exaggerated by critics:

“The environmental impact of Bitcoin mining is massively exaggerated by critics & traditional financial authorities (IMF, etc.) because they know they can divide a new counterculture movement by using fake environmental arguments. They are trying to gaslight us against each other. They gaslight the world with fake green arguments, and I understand why: They don’t want to lose influence over the levers of power of a system that only works for the elite.”

$30K BTC price has ‘severe impact’ on Bitcoin miner profits — analysis

Miners are facing an increasingly problematic climate for participating in the Bitcoin blockchain, and only higher BTC prices can help.

Bitcoin (BTC) is squeezing its miners this month as suppressed prices threaten to impact profitability.

The latest data shows both narrowing profit margins and miners waiting longer to recoup their initial investment.

Miner production cost faces off with BTC price

While Bitcoin miners have largely held off on major distribution as BTC/USD descends from all-time highs, the picture now appears precarious.

Calculations from on-chain analytics platform CryptoQuant reveal that miners’ production price — how much it costs to mine a single Bitcoin — could be right where the current spot price resides.

While “raw” costs may be around $22,000 per BTC for miners in North America, which is home to the lion’s share of hashing power, additional costs could put the total at more like $30,000.

“We estimate cost basis for bitcoin miners in North America around $22K per bitcoin mined. This estimate includes the direct cost of mining and S&A expenses. It does not include depreciation and amortization charges,” CryptoQuant senior analyst Julio Moreno confirmed to Cointelegraph in private comments:

“If depreciation and amortization charges are included then the cost basis for mining Bitcoin is at around $30K, basically at the same level as current bitcoin price.”

Bitcoin miner exchange flows vs. BTC/USD chart. Source: CryptoQuant

Fears of a “capitulation” event among miners should spot price deteriorate remain a talking point. So far, however, only the May dip below $24,000 saw a noticeable reaction from the mining community.

“Our data shows increasing Bitcoin flows from miners to exchanges during March 2022 and then a sharp spike in flows during the first week of May. This is in line with Bitcoin selling reported by some mining companies in Q1 2022,” Moreno added.

In January, miners’ production cost appeared to be at around $34,000, separate data showed.

Bitcoin miner ROI expands in May 

Continuing, mining firm Luxor’s Hashrate Index metric produced more interesting insights.

Related: Bitcoin miners say NY ban will be ineffective and ‘isolate’ the state

The Index, which shows the current price in United States dollar per terahashes, according to ASIC miner efficiency, confirms that that cost area has been decreasing incrementally since December 2021.

At the same time, findings by Twitter user XBTJames show the time taken for the average participant to enter profit by seeing return on investment (ROI) is expanding.

“Time to ROI has been increasing steadily since the ‘China Ban’ ASIC firesale last year. While USD pricing on ASICs has come down, the selloff in BTC and the increase in difficulty have combined to severely impact mining profitability,” the account explained in a series of tweets.

XBTJames added that higher BTC prices would be needed to reduce the pain for miners, including new market players and those looking to expand their hashing capabilities.

Bitcoin ASIC Price Index vs. BTC/USD chart (screenshot). Source: Hashrateindex.com

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.

Kazakhstan’s central bank ‘isn’t going to ignore’ the crypto market

According to the chairman, the central bank will decide on implementing its digital currency by the end of 2022.

While Kazakhstan’s government is catching up with the tremendous volume of crypto mining in the country by introducing new taxes and regulations, the local central bank intends to explore the possibilities that crypto offers. 

During the press conference held on Tuesday, June 7, the chairman of the Kazakhstan National Bank Galymzhan, Pirmatov, stated that the nation aims to extract the profit from technologies the cryptocurrency market could provide. He emphasized the attractiveness of innovations and made reservations about the risks to macroeconomic stability. The official doesn’t think that the bank is late to the game:

“I don’t think that the National Bank is a latecomer. Like many other banks and financial regulators across the globe, we’re watching closely and researching the question.”

Pirmatov didn’t give away any details on the bank’s possible stance on crypto and warned that it is too early to speak about legalization, although consultations with market participants are planned:

“The approach is very simple: We aren’t going to ignore this market. We want to extract the maximum profit from the innovative potential these technologies give us.”

Related: Bitcoin miners’ resilience to geopolitics: A healthy sign for the network

The executive also revealed some news about the National Bank’s central bank digital currency (CBDC) project. According to him, the bank still intends to announce its methodology on a digital tenge by the end of June. The final decision on implementing the CBDC will reportedly be made in accordance with that methodology before the end of the year.

On May 25, the Kazakh parliament passed amendments to the national tax code in the first reading. The amendments would impose a crypto mining tax tied to the electricity prices consumed by mining entities. One of the largest mining markets in the world, Kazakhstan generated as little as $1.5 million of state earnings from mining in Q1 2022. According to the State Revenue Committee of the Ministry of Finance’s report, a significant amount of the expected fees has not been received as the government had shut down a wide number of crypto mining firms to “ensure energy security.”

Law Decoded, May 30–June 6: Terra’s aftermath in China, Japan and South Korea

Last week brought some notable reactions to the stablecoin’s depegging in the East Asia region.

The “long waves” of TerraUSD’s May 7 collapse, which we noted two newsletters ago, are extending even further. Last week brought some notable reactions to the stablecoin’s depegging in the East Asia region. 

A Chinese state-owned media outlet, the Economic Daily has signaled that the Chinese government may introduce even tighter regulations on cryptocurrencies and stablecoins due to the collapse of the Terra ecosystem. It might even mean a complete ban on stablecoins to prohibit ownership, transfer, purchase and sale of the assets, some experts believe. What China plans, Japan does — as a new law will limit the issuance of stablecoins to licensed banks, registered money transfer agents and trust companies.

It comes as no surprise that South Korea, the birthplace of Terra’s creator, is also among the first nations to react. Amid signs that Terraform Labs co-founder Do Kwon was facing legal trouble in South Korea, the country’s ruling party announced the launch of the Digital Asset Committee, whose task would be to oversee crypto until a permanent government entity is established. This is at the same time when the nation’s Financial Supervisory Service is demanding reports from 157 payment gateways about any service related to crypto, its plans for the future and disclosure of digital assets.

An open letter from crypto critics

From 2018 to 2021, the budget spent on crypto lobbying grew from $2.2 million to at least $9 million, and that didn’t go unnoticed. A group of academics, software developers and technology experts decided to pen an open letter to lawmakers in Washington, urging them to resist the lobbyist pressure and attempts to create a “regulatory safe haven” for crypto. The crypto community did not stay silent and expressed its disagreements with the letter and its contents — sadly, in some cases recursing to calling the co-signers “trolls” and “attention seekers.” 

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401(k) will fight for crypto in court

The United States Department of Labor’s March warning to 401(k) providers to stay away from crypto in their portfolios provoked some serious pushback across the spectrum of industry supporters, from congresspeople to trade associations. But ForUsAll, a 401(k) retirement provider with crypto already accessible to its clients, went even further and sued the Department. The company is seeking the withdrawal of a DOL compliance assistance release, which explained that the Department’s Employee Benefits Security Administration may “conduct an investigative program” to target 401(k) plans that contain cryptocurrency.

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One step closer to mining moratorium in New York

Two months after it passed the lower chamber, the proof-of-work mining ban bill was approved by the New York State Senate. It means “no” to any new mining operations in the state for the next two years, but anyone using 100% of renewable energy is spared from the prohibition. Will other states follow New York and outlaw PoW mining to save the environment? That is surely not impossible. Though the European Parliament had to remove a similar plan after facing pushback. 

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There’s even more in the full version of Cointelegraph’s Law Decoded newsletter. To receive Cointelegraph’s newsletter of blockchain and crypto policy developments straight to your inbox, subscribe below!

Traders think Bitcoin bottomed, but on-chain metrics point to one more capitulation event

BTC price gravitates around the low $30,000 zone, luring traders to believe the bottom is in, but data from Glassnode warns of another final sell-off.

The bull market euphoria that carried prices to new highs throughout 2021 has given way to bear market doldrums for any Bitcoin (BTC) buyer who made a purchase since Jan. 1, 2021. Data from Glassnode shows these buyers “are now underwater” and the market is gearing up for a final capitulation event. 

Bitcoin net unrealized profit/loss. Source: Glassnode

As seen in the graphic above, the NUPL, a metric tha is a measure of the overall unrealized profit and loss of the network as a proportion of the market cap, indicates that “less than 25% of the market cap is held in profit,” which “resembles a market structure equivalent to pre-capitulation phases in previous bear markets.”

Based on previous capitulation events, if a similar move were to occur at the current levels, the price of Bitcoin could drop into a price range of $20,560 to $25,700 in a “full-scale capitulation scenario.”

The market is in search of the bottom

With the crypto market clearly trading in bear market territory, the question on everyone’s mind is “where is the bottom?”

One metric that can help provide some possible guidance is the Mayer Multiple, an oscillator that tracks the ratio between price and the 200-day moving average.

Mayer Multiple model for Bitcoin. Source: Glassnode

In previous bear markets, “oversold or undervalued conditions have coincided with the Mayer Multiple falling in the range of 0.6–0.8,” according to Glassnode and that is precisely the range where Bitcoin now finds itself.

Based on the price action from previous bear markets, the recent trading range of Bitcoin between $25,200 and $33,700 lines up with the B phase of the previous bear market cycles and could mark the low of BTC in the current cycle.

The Bitcoin realized price model also offers insight into what a potential price bottom for Bitcoin could be, with the current reading provided by the Bitcoin data provider LookIntoBitcoin suggesting the realized price for BTC is $23,601 as of June 5.

Bitcoin realized price. Source: LookIntoBitcoin

Combining these two metrics suggests that the low for BTC could occur in the $23,600 to $25,200 range.

Related: Amid crypto bear market, institutional investors scoop up Bitcoin: CoinShares

Short term holder and miner capitulation

Selling in the current market conditions has largely been dominated by short-term hodlers, similar to the behavior that was seen during the two previous extended bear markets where long-term holders held more than 90% of the profit in the market.

Long-term Bitcoin holders share from supply in profit. Source: Glassnode

The recent drop below $30,000 for Bitcoin saw the percentage of supply in profit spike above 90% for the long-term holder cohort, suggesting short-term holders have “essentially reached a near-peak pain threshold.”

According to Glassnode, miners have also been net sellers in recent months as the decline in BTC has hampered the profitability for miners resulting in “an aggregate miner balance reduction of between 5K and 8K BTC per month.”

Bitcoin miner net position change. Source: Glassnode

Should the price of BTC continue to decline from here, the potential for an increase in miner capitulation is not out of the question, as demonstrated in the past by the Puell Multiple, which is the ratio of the daily issuance value of bitcoin to the 365-day moving average of this value.

Puell multiple vs. BTC price. Source: LookIntoBitcoin

Historical data shows that the metric has declined into the sub-0.5 zone during the late stages of previous bear markets, which has yet to occur during the current cycle. Based on the current market conditions, a BTC price decline of an additional 10% could lead to a final miner capitulation event that would resemble the price decline and selling seen at the hight of previous bear markets.

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.

Bitfinex Bitcoin longs hit a record-high, but does that mean BTC has bottomed?

A key derivatives metric used by margin traders has hit a record-high, but there’s plenty of risk and a catch to consider.

Bitcoin (BTC) has been unable to close above $32,000 for the past 28 days, frustrating bulls and pushing the Fear and Greed index to bearish levels below 10. Even with June 6’s small boost, the tech-heavy Nasdaq stock market index is down 24% year-to-date.

Investors who keep a close eye on regulatory development were possibly scared after New York state made clear its intention to regulate the crypto industry, including Bitcoin mining.

On June 2, New York Attorney General Attorney Letitia James issued an investor alert against “risky cryptocurrency investments,” citing the assets’ volatility. According to Cointelegraph, the attorney general is convinced that crypto investments create “more pain than gain” for investors.

The New York State Senate approved a proof-of-work (PoW) mining ban on June 2 and the proposed controversial bill aims to prohibit any new mining operations in the state for the next two years and is now headed for the governor’s desk.

Interestingly, as all of this takes place, Bitcoin derivatives traders have never been so bullish, according to one metric.

Margin traders are extremely bullish

Margin trading allows investors to leverage their positions by borrowing stablecoins and using the proceeds to buy more cryptocurrency. When those savvy traders borrow Bitcoin, they use the coins as collateral for shorts, meaning they are betting on a price decrease.

That is why some analysts monitor the total lending amounts of Bitcoin and stablecoins to gain insight into whether investors are leaning bullish or bearish. Interestingly, Bitfinex margin traders entered their highest ever leverage long (bull) position on June 6.

Bitfinex BTC margin longs (blue), in BTC contracts. Source: TradingView

Bitfinex margin traders are known for creating position contracts of 20,000 BTC or higher in a very short time, indicating the participation of whales and large arbitrage desks.

Notice that the longs (bull) indicator vastly increased in mid-May and currently stands at 90,090 BTC contracts, its highest-ever registry. To understand how severe this movement was, one might compare it to the June–July 2021 previous all-time high of 54,500 BTC contracts in longs.

These traders hit the bullseye as their bullish positions peaked right as Bitcoin price bottomed. Over the subsequent months, they could sell those long (bull) contracts at a profit, reducing the number of open long positions (blue line).

Sometimes even whales get it wrong

One might assume that these whales and arbitrage desks trading at Bitfinex margin markets have better timing (or knowledge), and thus it makes sense to follow their steps. However, if we analyze the same metric for 2019 and 2020, a completely different scenario emerges.

Bitfinex BTC margin longs (blue), in BTC contracts. Source: TradingView

There were three hikes in the number of Bitfinex BTC margin longs this time around. The first instance happened between mid-November and mid-December 2019 after the indicator jumped from 25,200 BTC to 47,600 BTC longs. However, over the next month, the Bitcoin price failed to break above $8,300 and these traders closed their positions with minimal gains.

The next wave of BTC longs took place in early-February 2020, but those traders were caught by surprise after the Bitcoin price failed to break $10,500, forcing them to close their margin positions at a considerable loss.

Bitfinex BTC margin longs increased from 22,100 to 35,700 contracts in late-July 2020. The movement coincided with the price rally to $47,000, so the early entrants might have scored some profit, but most of the investors exited their margin longs with no gains.

Clever margin longs might be right 75% the time, but there’s a catch

To put things in perspective, over the previous four instances where BTC margin longs (bulls) significantly increased, investors had one profitable trade, two that were mostly neutral and one considerable loss.

Some might say odds still favor those tracking the indicator, but one must remember that whales and arbitrage desks could easily crash the market when closing their positions. In such cases, those following the strategy might arrive late to the party and come out at a loss.

Will the current Bitfinex margin longs increase result in extreme profits? It might depend on how traditional markets, mainly tech stocks, perform over the next couple of weeks.

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

BTC price snaps its longest losing streak in history — 5 things to know in Bitcoin this week

The longest weekly losing streak in Bitcoin history is finally broken, but the mood among analysts is anything but unanimously bullish.

Bitcoin (BTC) starts a new week with some fresh hope for hodlers after halting what has been the longest weekly downtrend in its history.

After battling for support throughout the weekend, BTC/USD ultimately found its footing to close out the week at $29,900 — $450 higher than last Sunday.

The bullish momentum did not stop there, with the pair climbing through the night into June 6 to reach multi-day highs.

The price action provides some long-awaited relief to bulls, but Bitcoin is far from out of the woods at the start of what promises to be an interesting trading week.

The culmination will likely be United States inflation data — this, itself, a yardstick for the macroeconomic forces of the world globally. As time goes on, the impact of anti-COVID policies, geopolitical tensions and supply shortages is becoming all the more apparent.

Risk assets remain an unlikely bet for many, as central bank monetary tightening is seen to be apt to pressure stocks and crypto alike going forward.

Bitcoin’s network fundamentals, meanwhile, continue to adapt to the surrounding reality and its impact on network participants.

Cointelegraph takes a look at five factors to bear in mind when charting where BTC price action may be headed in the coming days.

Tenth time’s the charm for BTC weekly

It was a long time coming, but Bitcoin has finally closed out a “green” week on the weekly chart.

BTC/USD had spent a record nine weeks making progressively lower weekly closes — a trend that began in late March and ended up being the longest ever in its history.

On June 5, however, bears had no chance, pushing the pair to $29,900 before the new week began, this still being approximately $450 higher than the previous week’s closing price.

That event sparked several hours of upside, with local highs totaling $31,327 on Bitstamp at the time of writing — Bitcoin’s best performance since June 1.

While some celebrated Bitcoin’s newfound strength, others remained firmly cool on the prospects of a more substantial rally.

Cointelegraph contributor Michaël van de Poppe eyed the open CME futures gap from the weekend, this providing a lure for a return to $29,000.

“Still expecting this to be happening on Bitcoin,” he told Twitter followers.

“A drop towards the CME Gap at $29K would make a lot of sense before a short reversal towards $31.5K.”

A look at order book data reinforces the friction bulls are likely to face in the event of a continued breakout. At the time of writing, the area around $32,000 had more than $60 million in sell-side liquidity lined up on Binance alone.

BTC/USD order book data chart (Binance). Source: Material Indicators

For Il Capo of Crypto, a Twitter analytics account well known for its sobering takes on upcoming BTC price action, there was likewise little to feel confident about.

Nonetheless, the market was not without its optimism.

“Having a plan is more important than guessing the correct direction,” popular Twitter account IncomeSharks argued.

“I think we drop then go up, so I’ll be longing if this happens. If stocks open up green we could rally and I’ll pivot to alts to ride them up. TP level is at $34,000 for now.”

Countdown to U.S. CPI reado

U.S. inflation is at its highest since the early 1980s, but will it continue?

The market will find out this week as June 10 sees the release of Consumer Price Index (CPI) data for May.

One of the benchmarks for gauging how inflation is progressing, CPI prints have traditionally been accompanied by market volatility both within crypto and beyond.

The question for many is how much higher it can go as the aftermath of the Russia-Ukraine conflict and its impact on global trade and supply chains continues to play out.

In the United States, the Federal Reserve’s interest rate hikes are also under scrutiny as a result of prices surging.

The end of the “easy money” era is a difficult one for stocks and correlated crypto assets more generally, and that pain trend is expected not to end any time soon, regardless of inflation performance.

“Liquidity is going out of the market and what that means is it will have an impact on the equity markets,” Charu Chanana, market strategist at Saxo Capital Markets, told Bloomberg.

“We do expect that the drawdown in the equity markets still has some room to go.”

Chanana was speaking as Asian markets rallied in early week’s trading, led by China loosening its latest round of COVID-19 lockdown measures.

The Shanghai Composite Index was up 1.1% at the time of writing, while Hong Kong’s Hang Seng traded up more than 1.5%.

Beyond the intraday data, however, the mood when it comes to macro versus crypto is very much one of cold feet.

For trading firm QCP Capital, the latest contraction in U.S. M2 money supply — only its third in around twenty years — is another reason to not take any chances.

“This contraction in M2 has been a result of Fed hikes and forward guidance, which drove a surge in reverse repos (RRP) to all-time record levels. Banks and money market funds withdrew money from the financial system in order to park it with the Fed to take advantage of high overnight interest rates,” it wrote in the latest edition of its Crypto Circular research series.

“This draining of liquidity will only be exacerbated by the upcoming QT balance sheet unwind as well, beginning 1 June. We expect these factors to weigh on crypto prices.”

U.S. inflation data chart. Source: St. Louis Fed

Miner capitulation “very close”

Despite weeks of lower prices endangering their cost basis, Bitcoin miners have so far held off from a significant distribution of coins.

This may soon change, new analysis argues, sparking what has historically accompanied generational BTC price bottoms.

In a tweet on June 6, Charles Edwards, founder of crypto asset manager Capriole, highlighted a classic bottom signal in Bitcoin’s hash ribbons metric.

Hash ribbons measure miner profitability and have been historically accurate in correlating with price phases. Currently, the “capitulation” phase similar to March 2020 is underway, he explained but hodlers should do anything but sell as a result.

“Hash Ribbon miner capitulation is very close. Bitcoin mining profit margins are getting squeezed,” Edwards commented.

“Reminder: this is not a sell signal. The end of a capitulation period has historically set up some of the best long-term buys for Bitcoin.”

Bitcoin hash ribbons chart. Source: Charles Edwards/ Twitter

Previously, Cointelegraph reported on miners’ ongoing challenges, which now include a ban on the practice by the state of New York this month.

Fundamentals echo miner calm

Fluctuations in miner participation will have a palpable effect on Bitcoin’s hash rate and network difficulty.

So far, the hash rate has remained stable above 200 exahashes per second (EH/s), according to estimates, indicating that miners for the most part remain active and have not decreased activity over cost concerns.

Data covering Bitcoin’s network difficulty likewise presents a calm short-term picture.

At its upcoming automated readjustment this week, difficulty will decrease by less than 1%, again reflecting a relative lack of upheaval in the mining sphere.

By contrast, the previous readjustment two weeks ago saw a 4.3% reduction, marking the biggest reversal since July 2021.

Bitcoin hash rate, difficulty estimates chart. Source: BTC.com

Beyond the short term, a sense of optimism prevails among some of Bitcoin’s best-known commentators.

“As we see in the growth of its hash rate, today Bitcoin is roughly 50% cheaper yet 20% stronger than a year ago,” podcast host Robert Breedlove noted in part of a Twitter debate on June 5, arguing that this showed the “mobilization” of entrepreneurs interested in fueling Bitcoin’s growth.

Megawhales show “promising sign”

In terms of putting their money where their mouth is, Bitcoin’s biggest investors could be showing the way this month.

Related: Top 5 cryptocurrencies to watch this week: BTC, ADA, XLM, XMR, MANA

As noted by sentiment monitoring firm Santiment, entities controlling 1,000 BTC or more now own more of the BTC supply than at any point in the past year.

“The mega whale addresses of Bitcoin, comprised partially of exchange addresses, own their highest supply of $BTC in a year,” Santiment summarized on June 6.

“We often analyze the 100 to 10k $BTC addresses for alpha, but accumulation from this high tier can still be a promising sign.”

Bitcoin megawhale accumulation trends chart. Source: Santiment/ Twitter

Data from on-chain analytics firm CryptoQuant meanwhile allays fears that users are sending BTC en masse to exchanges for sale. The overall trend in decreasing exchange reserves continues and is at levels last seen in October 2018.

Bitcoin exchange reserves vs. BTC/USD chart. Source: CryptoQuant

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.