Bitcoin Fear and Green Index Newsletter. Block 6
Welcome to this week’s issue of Bitcoin Fear and Green Index Newsletter. It is a community-driven effort, and we all hope to see this newsletter grow with quality insight and analytics from community contributors like yourself. Read till the end to learn how you can participate.
Current Bitcoin Fear and Greed Index:
Bitcoin Technical Analysis
This past week, Bitcoin went through a capitulation event that left some people doubting the validity of the recent leg up and questioning if the bear market is on the horizon. In this post, I will expand on my thoughts regarding the recent happenings for Bitcoin and introduce an indicator that very few people are paying attention to.
First, let's go back in time and discuss the events that took place. After reaching a local high of $48,843 on Saturday the 18th of September, things were looking quite hopeful for Bitcoin on the short-term. That would not remain the case as on Monday the 20th, Bitcoin would open a daily candle around $47,250 and initiate a crash to $42,500. The crash would not stop there however, as on Tuesday the 21st, Bitcoin would continue dumping to a low of $39,600. This would end up creating a -19% drop from top to bottom. As things begin to cool off, the price would bounce back from previous lows to the highs of ~$45,180, all during a 3 day period starting on Wednesday the 22nd and ending on Friday the 24th. Bitcoin would then take a pause from the upward momentum and return close to previous lows of around $40,800 on the 26th before stabilizing at $43,250 as of this writing.
Note that during all the chaos, the price ($39,000) would only briefly wick below the 20 week SMA ($40,800) before returning to higher prices. That goes to show the strength of the market support band (20 week SMA & 21 week EMA) especially when considering that for the past 3 weeks of testing the band, Bitcoin would not close below it whatsoever. And with the coming weekly close only being a few hours away, it seems highly unlikely that the price would close below it this time as well (current price: $43,250). I've said this before and I'll say it again, the longer Bitcoin can successfully test the market support band, the much higher the likelihood of it initiating a dominant and forceful leg up just as we saw right after a 6 week test of the band during September of 2020.
There is an indicator that very few people are paying attention to, and that indicator is the 8 week SMA. Taking a quick look at the chart above, we can see just how remarkable of a role the 8 week SMA played during the major leg up of Q4 2020 and Q1 2021. With each pullback, the price would touch the 8 week SMA before bouncing off of it and initiating a powerful continuation of the upwards momentum while simultaneously creating a new high. This illustrates the significance of closing above the 8 week SMA during a leg up, and how that could be indicative of a continuation of the uphill momentum. However, with the 8 week SMA being around $47,000 it would be unlikely that we close above it this week.
Does that mean that the price will not rally upwards if Bitcoin does not close above the 8 week SMA? Absolutely not. It means that it'll probably take us more time before initiating the next leg up, and that would make perfect sense when considering that Bitcoin is 3 weeks into the support band test, and we know that this test usually takes up to 6 weeks before any positive momentum can recommence.
With another crash taking place, I'm still exceptionally confident in the power of this bull market. When looking at the macro chart, it becomes clear how everything is going according to plan. That plan would be to successfully test the cycle support band before initiating the second phase of this bull run. There will be shakeouts. There is no free lunch in this market. The resilient will be rewarded and the frail will be punished.
TA review by @CryptoSultan21
Bitcoin Adoption News This Week
What another crazy week! Through the midst of China once again banning Bitcoin, we yet again see another week that Bitcoin can not only survive through but thrive through! From Robinhood releasing open wallet statements to Twitter adding Lightning Payments via Twitter, so much more adoption and progress has been made!
Compass Mining: At-Home Mining
This week also saw Compass Mining announce the launch of At-Home Mining! This direct-to-consumer service provides customers with the ability to mine bitcoin from their own homes.
Clients that hire the service will have an ASIC machine delivered to their door within three weeks and customer support available to help them install the rig. "Bitcoin was started by home miners and now we are seeing a renaissance of home mining," said Thomas Heller, the chief business officer of Compass Mining. "We are proud of the work we have put into making Compass an industry leader and we are confident this new offering will bring more people into bitcoin mining, which is good for the community as a whole." With its newest service, Compass is taking a shot towards re-enabling regular folks to mine bitcoin from the comfort of their homes without having to pay additional hosting facility fees. "As Compass continues to expand the services we offer, we are continuously looking to make bitcoin mining accessible for everyone. With At-Home Mining, we are bringing Bitcoin mining back to its roots," said Whitney Gibbs, CEO of Compass. "While industrial mining operations and retail miners primarily use Compass to help them secure space in one of our 23 hosting facilities around the world, we have found that there is significant interest from our customer base to set up operations in their own home. By creating this new product line, it gives more flexibility and options of where to host their machine and mine Bitcoin."
GDA: $431 Million Funding
Later on throughout the week, Bitcoin miner active since 2013, Genesis Digital Assets, announced the raise of $431 million to fund the company's expansion plans! The round, led by investment firm Paradigm, comes less than two months after the miner's previous funding round of $125 million.
Former investors also joined the funding round, including NYDIG, Stoneridge, FTX, Ribbit, Electric Capital, Skybridge, and Kingsway Capital, the $2 billion U.K.-based private equity fund that solo-led the previous round in total. Paradigm's co-founder and managing partner Matt Huang, who joined the Genesis board of directors, commented on the announcement. "Over nearly a decade, GDA's team have built what we regard as the most impressive bitcoin mining operation in the world," said Huang. "They have everything it takes to continue to scale their operations and make bitcoin mining even more efficient, and we're thrilled to support their mission." The newest funding round, one of the largest sums announced by bitcoin mining companies, will empower Genesis to fulfill its many expansion plans. The company said it expects to increase its hashrate capacity significantly over the next 12 months. The bitcoin miner's current data center capacity of around 170 megawatts translates into a total hashrate capacity of 3.3 exahashes per second (EH/s), which the company said it plans to increase to nearly 11.9 EH/s in the next year. And the recent abundant investments might enable Genesis to achieve its wild expansion plans.
Robinhood Testing Open Bitcoin Wallets
Robinhood is finally testing Bitcoin withdrawals, as well as a new digital hot wallet, the firm announced on its blog Wednesday! Robinhood also opened a waitlist where users could sign up to test out the forthcoming wallets.
The update comes after the past year of broad criticism of Robinhood for, among other things, not allowing users to control their own Bitcoin private keys. The firm repeatedly hinted at enabling such features over the last year without delivering any evidence that such products were being developed. Robinhood’s announcement of the new hot wallet and Bitcoin and crypto transfer features comes after a mounting demand by customers. Currently, Robinhood offers Bitcoin strike price exposure through their platform, but without the ability to withdraw, customers are duped into thinking they are holding Bitcoin proper, as in the hard store of value property, when in fact they are holding a security, a second layer of Bitcoin which marks its price, but lacks the underlying asset or any of the security from firms like Robinhood that Bitcoin provides. This means that on the Robinhood platform, Bitcoin and other cryptocurrencies are functionally equivalent. Robinhood Chief Executive Officer Vlad Tenev previously commented on the hot wallet development saying, “It’s something that our teams are working on. The ability to deposit and withdraw cryptocurrencies is tricky to do with scale, and we want to make sure it’s done correctly and properly.”
Dutch PSV Football Club: Bitcoin Partnership
This week also had prominent Dutch football club PSV announce a partnership with bitcoin exchange Anycoin Direct, which became the club's Official Partner for the following two seasons!
The exchange paid the sponsorship contract entirely in Bitcoin, a first among the major European football clubs, and PSV has recently confirmed that the BTC is still held in the club's balance sheet. "The possibilities and the future that the world of Bitcoin offers is very promising," said Frans Janssen, commercial director of PSV, when he signed the sponsorship agreement. Janssen created the necessary Bitcoin wallets immediately after signing the contract to receive the proceeds in BTC sovereignly. The club has been inclined to self-custody all the bitcoin received through the sponsorship since August, with no plans to sell it. PSV's pioneering move is set to prompt other clubs to adopt bitcoin, mainly because of game theory. As BTC keeps gaining purchasing power against the euro, clubs without bitcoin exposure will be at a disadvantage. This will likely be demonstrated in transfer windows when PSV might secure better players because of the price-appreciated BTC in its balance sheet.
Twitter Enables Bitcoin Tipping
On Thursday, Twitter officially enabled third-party Bitcoin tipping services, such as Strike, through iOS users’ profiles on their platform! The new feature will have the ability to link both Bitcoin and Lightning Network addresses.
The company told Reuters on a press call that they hope to roll out the feature for Android in the coming weeks. The feature is presumed to be compatible with Strike, Cash App, Muun, and other third-party Bitcoin payment solutions. Users will likely be able to send funds from any Bitcoin address but must receive funds through the Strike API. Twitter stated they were “not in the flow of funds” and would not be taking a commission on the payments. A video was released on Thursday of Jack Mallers demonstrating the service with the firm’s integration of the Strike API. Most payment solutions for the tipping feature will depend on the services available in users’ geographic locations. The exception to this will be Bitcoin and Lightning tips, which will be available to users worldwide, as Bitcoin functions independent of location.
Lightning Network ATH
Public channel capacity on the Bitcoin Lightning Network continues to explode, with channel capacity hitting another all-time high of 2,738 Bitcoin! The Lightning Network is a Layer 2 scaling solution built on top of the Bitcoin base layer, which allows two peers to open up a channel between each other and defer final settlement into the future.
Although the network functions using payment channels opened between two peers, public channels and node interconnectivity allow for payment routing through other Lightning nodes on the network, who can selectively choose what fees are charged and whom on the network they are connected to. In the last three months, the Lightning Network has witnessed spectacular growth, most likely in part to El Salvador adopting bitcoin as legal tender, with the Lightning Network playing a major role in the onboarding process. Not only is public-channel capacity going parabolic, but the exponential appreciation of the price of bitcoin since Lightning first began to enter mass beta testing in early 2018 has meant that the dollar-denominated channel capacity of the network has exploded.
China Bans Bitcoin (Again)
And it wouldn't be a classic adoption week if China didn't ban Bitcoin at least once! The People’s Bank of China (PBOC) reposted a memo from September 15th that addresses the country's Bitcoin ban to their website, causing widespread Bitcoin selling and a Friday morning price dip.
The memo outlines a nationwide crackdown on Bitcoin and other cryptocurrencies out of concern over them “disrupting economic and financial order, breeding illegal and criminal activities such as gambling, illegal fund-raising, fraud, pyramid schemes, and money laundering, seriously endangering the safety of people’s property.” The People’s Bank of China has again called prominent financial institutions in China to reinforce an evolving country-wide ban on Bitcoin exchanges and transactions. The institutions were urged to help the central bank prevent Chinese citizens from trading Bitcoin through exchanges, both domestic and abroad, and over-the-counter platforms. The PBOC details how inter-departmental efforts are required to shut down exchanges and on-ramps to Bitcoin and other cryptocurrencies, and to penalize suspected parties involved in the distribution of Bitcoin or crypto securities to “maintain economic and financial order and social harmony and stability.” The memo’s language at times slips from stately and bureaucratic into an idealized utopian vision.
Another closing week, another dollar built on war and oppression is sucked into the ever-growing network that is Bitcoin. As time goes on we will continue to see doubt and despair turn to certainty and encouragement. Stay Strong and HODL On!
Bitcoin Adoption News by @CuredSausage
Community
This issue is supported by Crypto Jobs List - the largest source of blockchain and cryptocurrency jobs. There are hundreds of remote jobs that let your earn Bitcoin and other cryptocurrencies as a part of your marketing, writing or engineering job in this industry.
Participate in the next newsletter block!
We release this newsletter weekly and would love to feature the best contributors. Three sections are up for grabs:
This week’s chart, TA
This week’s regulation news
Major adoption news. Who’s accepting BTC/crypto?
To participate, submit your write up via this form. Best content will be featured and authors credited. ✌️