Academy Trading Ideas Article

Bitcoin Miners Anticipate Rainy Season as Price Remains Below $10K: Crypto Market Daily

2020.05.20

As of press time (11:00 UTC), Bitcoin (BTC) is trading near $9,800 and is down 0.25 percent over the last 24 hours, per OKEx’s BTC Index Price. Currently, the total cryptocurrency market capitalization is up 0.1 percent and BTC dominance is sitting at 66.7 percent, as per CoinGecko’s data.  

Large-cap cryptocurrencies are going sideways — with Ethereum (ETH) down 0.12 percent and Litecoin (LTC) up 0.42 percent.  

OKEx Token Index Board (as of 11:00 UTC). Source: OKEx

Under OKEx Coin Info, ORBS is the top gainer for the last 24 hours with an 18.16 percent return. Other top gainers are DEP and THETA. 

APM is the biggest loser over the last 24 hours — having lost 14.23 percent of its value. 

Top Gainers24H ChangeTop Losers24H Change
ORBS/USDT18.16%APM/USDT-14.23%
DEP/USDT17.35%DGB/USDT-12.85%
THETA/USDT16.10%KCASH/USDT-8.47%
Top Gainers & Losers (USDT) for the last 24 hours. Source: OKEx

Bitcoin mining difficulty decrease may increase price

According to the OKLink blockchain browser, Bitcoin changed difficulty at 10:06 Hong Kong time, today. The difficulty of the Bitcoin network decreased by six percent to 15.14T. 

Since 2011, there have been 264 difficulty adjustments, of which 48 have been downward adjustments. The downward adjustments of more than six percent have occurred 15 times — taking 31.25 percent in total, as per BeatleNews data. 

BeatleNews added that BTC prices have risen almost 50 percent or more a month after every downward difficulty adjustment of more than six percent — except the one on November 7, 2019. 

The rainy season has yet to arrive

Because electricity prices are so important to miners, the rainy season in the southwest region of China will determine if there could be a second life to those older mining rigs, like the Antminer S9. 

According to the BlockBeats report, many miners said they are still waiting for the rainy season. Due to the high temperature in Sichuan Province these days, the living demand for electricity has increased sharply — which led to the transfer of electricity from Bitcoin mining to ensure the daily use of electricity by residents. 

On F2Pool’s website, it listed that some mining pools can provide $0.032/kWh during the rainy season. Under this electricity cost, some S9 rigs may return to profitably mining. 

Institutional investors coming in with infrastructure get improved

As we noted in yesterday’s Crypto Market Daily, there are clear signs of Wall Street entering the Bitcoin market. Over the past week, CME options open interest rose to its all-time high — nearing $150 million.

The huge spike in CME Bitcoin Options Open Interest (OI) has further revealed that institutional traders have been betting more in the crypto field. The total option OI has taken 14 percent of the total market share, per Skew’s data, as of yesterday. 

The skyrocketing OI could be explained by the possibility that more institutional clients are holding long-term positions. 

Total BTC Options Open Interest. Source: Skew

Since more institutional clients have been onboarded to CME and Bakkt, security challenges are being discussed again. The hacking of several exchanges around the world has threatened some investors. For example, Binance was hacked for more than 7,000 bitcoins one year ago. 

Arca noted in its latest report that the CME offers a little known “Exchange for Physical” option — which is a bilateral agreement between counterparties that allows one to settle its long position with actual bitcoins. 

Bakkt’s regulated New York-based physically-delivered crypto exchange announced its new insurance coverage and has reported that it has onboarded 70 institutional clients. The development of this infrastructure will also help attract more institutional investors. 

Bitcoin Technical Analysis

Per OKEx BTC Quarterly Futures (BTCUSD20200626) price, Bitcoin is still running in the $9,280 to $10,200 range, in the short-term, and still in an upward channel. As long as $9,280 support holds, the short-term trend should be dominated by the bulls. 

Due to the unchanged trading volume for intraday trading, chasing for the price in an uptrend could be very risky. We expect the narrow range will end by the May, expiry at the latest. 

OKEx BTC Quarterly Futures (BTCUSD0626) 4H chart. Source: OKEx

Ethereum Technical Analysis

For OKEx Ethereum Quarterly Futures (ETHUSD0626), $205 is the key support level for short-term trading. If we cannot see a price breakout above $220 with huge volume, it could be another bull trap. 

We still cannot see an independent trend in the price of ether. 

OKEx ETH Quarterly Futures (ETHUSD0626) 4H chart. Source: OKEx

Disclaimer: This material should not be taken as the basis for making investment decisions, nor be construed as a recommendation to engage in investment transactions. Trading digital assets involve significant risk and can result in the loss of your invested capital. You should ensure that you fully understand the risk involved and take into consideration your level of experience, investment objectives and seek independent financial advice if necessary


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