Crypto Market Forecast: W/C 14th September 2020
A curated weekly summary of forward-focused crypto news that matters. This week - Bitcoin hashrate surges as miners switch from Bitcoin Cash and Bitcoin SV, the Iranian government gets behind Bitcoin mining - and two new launches on Coinbase
It was a sideways week in crypto markets with the Bitcoin Price (BTC) up marginally and by less than 1%. The Ethereum Price (ETH) and Ripple Price (XRP) rose by ~2% and fell by ~1% respectively. The overall market cap for crypto rose by ~1%.
According to data from blockchain.com, Bitcoin’s seven-day average hash rate hit 131.874 million TeraHash/second (TH/s) on September 12th, a new all-time high for the network. This is up more than 45% from hashrate lows touched in early May. The May dip was driven by the Bitcoin halving event that cut block rewards from 12.5BTC to 6.25BTC, sharply reducing mining profitability and forcing many small miners out of the market.
The Bitcoin network’s hashrate rise in August and September suggests miners maintain a positive long term perspective on future price outlook and mining industry outcomes. This is despite a recent trend of sideways price movement with BTC stuck in a USD 10k-12k price range since late-July. It has often been suggested that the hashrate of Bitcoin follows its price but this has not been the case in recent times.
A factor in the hashrate rise maybe the recent price declines of major Bitcoin forks Bitcoin Cash (BCH) and Bitcoin SV (BSV). They also use the SHA-256 hashing algorithm and are direct alternatives to mining BTC. BCH and BSV prices respectively have fallen by 25% and 23% in the last month decreasing the appeal to mine on these networks. Both have observed flat hashrate growth in August – in stark contrast to the rising numbers on the Bitcoin network. The Bitcoin Cash mining community has expressed opposition to a mining tax expected to be implemented as part of a network upgrade in November.
Other factors driving Bitcoin’s rising hashrate include Chinese miners benefitting from cheap hydro energy costs during the ongoing annual “wet season” that occurs between July and through September in China’s Sichuan region. The industry has also benefited from new financial tools launched post-having that have allowed miners to protect themselves against price and difficulty volatility risk. These include the hashrate futures launched by the FTX exchange in May.
Bitcoin mining has observed a recent rise in global investment interest. In August, Nasdaq listed U.S mining firm Riot Blockchain announced that it would be purchasing 5,100 next-generation Bitmain S19 Pro Antminers (110 TH) for USD11.2 million from BitmainTech. Expected to be deployed by June 2021 this would triple the firm’s hashrate capacity. The Iranian government has also recently announced that it is going to permit Iranian power plants to mine Bitcoin on an industrial scale provided they comply with approved tariffs and are issued the legal license.
Crypto news for the week ahead
September 15th – YFI listing on Coinbase
Yearn.finance (YFI) is a decentralized finance (DeFi) platform that performs several functions including aggregated liquidity and automated making by managing a pool of liquidity provided by users across platforms like Curve, Aave, and DY/DX. YFI is the native governance token of the platform. Coinbase has announced that it will begin trading YFI tokens on September 15th as long as liquidity conditions are met. Trading will launch with only a YFI/USD pair and the exchange will begin inbound transfers the day before. The price of YFI has risen by ~54% in the last week.
September 15th – Loopring listing on Coinbase
Loopring (LRC) is an open-source protocol that provides developers with tools to build non-custodial, order book-based exchanges on Ethereum by leveraging zero-knowledge proofs. Coinbase has announced that it will begin trading LRC tokens on September 15th as long as liquidity conditions are met. Trading will launch with only a YFI/USD pair and the exchange will begin inbound transfers the day before.
Top 10 Crypto Summary
It was a mixed week of trading for large-cap assets on the Brave New Coin market cap table. Binance Coin (BNB) was a clear alpha performer rising 33% in an otherwise subdued market. The Binance Smart Chain (BSC) that utilizes BNB as its native token and powers applications and smart contracts, touched 10% of Ethereum’s transaction volume. A recent pickup may be driven by a host of new decentralized finance apps being built for BSC including Burgerswap and Cream, an app that was originally built on Ethereum.
Bitcoin Price Chart
The Bitcoin price recovered in the second half of the week after threatening to drop below the USD10,000 level following price slides on the 7th and 8th of September. Perhaps correlated with the network hashrate jump in recent weeks, data provider Glassnode reports that Miners to Exchange Flow (1d MA) just reached a 5-month high, spiking over the weekend. This suggests that many miners are looking to sell-off held BTC in the coming days.
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