Bitcoin Fear and Green Index Newsletter. Block 4
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 is 32 — Fear
Bitcoin Technical Analysis
This past week was the most volatile week for Bitcoin in almost 4 months. Did this flash crash jump start the bear market or could this be a potentially great indicator for Bitcoin and the entire crypto space? All questions will be answered in today's overview of the past week's happenings for Bitcoin.
If we go back to Tuesday, the 7th of September, we notice how the day starts off on a good note with Bitcoin creating a new local high at ~$52,900. That streak of good luck would not last long however, as for the next 12 hours the Bitcoin price would experience a flash crash and fall from the local high of $52,900 to the bottom of $42,860, losing an average of $836 per hour. Coincidentally, the bottom of this crash at $42,860 happens to be in perfect alignment with the 21 week EMA (Significant), as seen in the chart above. After falling to the 21 EMA on the weekly chart, the price would then bounce back from that level and continue trading, as of this writing, within a range between $44,800 and $47,000.
Now, did this flash crash cause a premature bear market? It's highly unlikely and I'll explain why. If we take a look at the chart above, we can see that the 21 week EMA and 20 week SMA are acting as the support band for this cycle. And with this flash crash, the price fell to the 21 EMA, barely breached through the crossover area, but did not even approach the 20 SMA. Instead, it bounced right off the 21 EMA and consolidated at higher price levels. One of many examples would be September 2020, where we can see how a successful test of the 21 EMA resulted in a massive bounce and a ~600% gain. Does that mean that Bitcoin is going to gain 600% after this bounce? No. We have to consider diminishing returns and accept that bitcoin cannot gain a constant 600% after each bounce off the 21 EMA. Nonetheless, this remains as a highly bullish indicator for Bitcoin and completely negates the idea of a bear market.
So what do we have to watch out for? We have to keep an eye on the support band and as long as Bitcoin does not close 1+ weekly candles below this band, there should be absolutely nothing to worry about. Even in the unlikely case where Bitcoin closes weekly candles below the support band, this would not indicate a clear-cut end for the bull cycle, only that it might take Bitcoin 3-4 months to recover before the next leg up. This cycle still has a lot of strength left in it and it would take an insurmountable amount of pressure to put a definite end to it this early.
TA review by @CryptoSulta21
Bitcoin Adoption News This Week
Bitcoin has officially become the legal currency of a whole country. On September 7th, 2021, El Salvador became the first country to adopt Bitcoin as legal currency, and for its citizens, the first to take a major step towards financial freedom. With this legalization, all companies doing business in El Salvador must accept Bitcoin as a means of payment, this has included multinational companies such as Starbucks and McDonalds.
Ukrainian Parliament Passes Bitcoin Law
Following the legalization of Bitcoin in El Salvador, on September 8th, the Ukrainian Parliament passed a law that legalized and regulated Bitcoin in the country! The bill drafted in 2020 passed with a total of 276 lawmakers supporting the law, and only six against it. The main purpose behind this bill seems to provide clarification on the asset and protect those who own Bitcoin, as it was not previously legal or illegal in the country.
Though not illegal, Ukrainian law enforcement agencies treated Bitcoin and other virtual currencies as a scam, resulting in Bitcoin businesses getting raided. Now that this bill is passed, courts can now properly protect individuals and businesses, since it provides tax clarity and officially allows Bitcoin businesses to operate within the country. It also sets some guidelines for how Ukraine may try and regulate Bitcoin more in the future. It is important to note that even though Bitcoin is now legal in Ukraine, that does not mean that BTC is legal tender in the country. That will require a whole other bill for that to happen in the future. This is great news and definitely a step in the right direction towards the country eventually adopting a full-on Bitcoin standard similar to El Salvador.
Union Investment Bitcoin Exposure
Not long after, a $500 billion German Union Investment company began to look for ways to add Bitcoin exposure to their business model. Portfolio manager Daniel Bathe told Bloomberg: "We are considering adding bitcoins in small amounts of 1% to 2% maximum to a handful of other funds for private investors."
At the beginning of this year, Union Investment included Bitcoin in a mixed fund for the first time. These were Delta 1 certificates in private funds called Flexibel Pro, these funds were allowed to invest up to 1% in Bitcoin and according to Bathe, and are currently just below that.
Blockstream & Macquarie Partnership
September 8th also saw, Bitcoin infrastructure company, Blockstream, and financial group, Macquarie announce a partnership to collaborate and explore carbon-neutral alternatives for their joint investment in bitcoin mining. "Macquarie's experience and scale in traditional infrastructure investment, as well as commodity and energy markets, and Blockstream's position as a leading Bitcoin miner and provider of Bitcoin-based technology solutions offers terrific potential," said Dr. Adam Back, Blockstream CEO. This initiative builds upon many of Blockstream's previous building-block developments in the bitcoin mining ecosystem. The company, which operates mining and hosting facilities in Quebec, Canada, and Georgia, announced Blockstream Energy in August, a new service that allows renewable energy producers to increase energy production efficiency and sell surplus energy. The company also recently launched its new ASICs manufacturing arm in a merger with mining hardware manufacturing company Spondoolies.
Bitmain Digital Mining Conference
On September 9th, Miami Mayor Francis Suarez at the Bitmain’s Digital Mining Conference concluded his speech by challenging the audience to “Go out there and elect the next President of the United States to be a pro-Bitcoin president.” A strong advocate of adopting innovation, Mayor Suarez has used Bitcoin to alter the public perception of Miami to give it the aura of something like a nascent Silicon Valley. During his speech, Suarez talked about working for years to integrate Bitcoin into the Miami “way of life.” Francis Suarez, son of the first Cuban-born mayor of Miami, brings a non-partisan pragmatism to the Bitcoin community. Notably, Suarez made Miami the second government in the world, and the first in North America to host Satoshi’s White Paper on its government website. He has been working toward putting Bitcoin on the city’s balance sheet. Miami has seen massive job growth and innovation in the tech sector in the last year, partly as a result of his efforts. Suarez’s goal is to make Miami the most innovative city in America. As his speech pointed out, governments can at times help facilitate such innovation, but in the case of Bitcoin and disruptive technologies which are hard or impossible to control, governments too often try to obstruct innovation.
Argo Blockchain & Galaxy Digital Loan Agreement
Within hours, Bitcoin mining giant, Argo Blockchain, entered into another BTC-backed loan agreement with Galaxy Digital as it pursues further operational expansions. According to an announcement by the London Stock Exchange, the new Bitcoin-backed loan agreement is to the tune of 18.05 million pounds (about $25 million). As previously reported, Argo entered into a prior BTC-backed loan agreement with Galaxy Digital for $20 million back in June. It is said, the United Kingdom-based Bitcoin miner will reportedly roll up both loans into one for a combined sum of $45 million and as part of the agreement, Argo will also utilize the fresh capital influx to support its expansion efforts in Texas. By securing a Bitcoin-backed loan, Argo Blockchain is able to increase its available capital without needing to liquidate mined BTC, and if bullish projections about the price of Bitcoin by the end of the year prove to be true, then the company could earn a significant yield by hodling the BTC sum, which will mean paying fewer US Dollars per Bitcoin during the repayment process. The company also stated that it is delighted to continue its business relationship with Galaxy digital as a financing partner.
Bitcoin in Texas' State Constitution
Down south in America, Texas is looking to take steps to amend Bitcoin into the state constitution! Most recently, Texas implemented two laws to ensure that cryptocurrencies are recognized under state commercial law. Texas House Bills 4474 and 1576 both took effect on Sept. 1, after being signed into law by Governor Greg Abbott this past June. While H.B. 1576 established a blockchain working group in Texas, H.B. 4474 provides a complete framework to demonstrate that virtual currency has a place under Texas law.
To put the importance of H.B. 4474 into perspective, Joseph Kelly, CEO of Unchained Capital — a Bitcoin financial services company based in Austin — said that as a result of Texas’ cryptocurrency laws, Unchained and their clients now have greater legal certainty surrounding activities such as purchasing Bitcoin or accepting it as collateral for loans. While Texas appears to be following in the footsteps of other innovative states, members of the Texas Blockchain Council — an industry association that advocates for blockchain — shared that bigger plans are underway. Lee Bratcher, president of the Texas Blockchain Council, says that there are discussions to integrate Bitcoin into the Texas Constitution, potentially as a constitutional amendment. According to Bratcher, the Texas Constitution has been amended more than 500 times. As such, he noted that a Texas state amendment related to the utilization of cryptocurrency for the function of property tax payment is a possibility.
As a new week dawns upon us, Bitcoin continues to grow ever more powerful and protective. Everything there is, and everything there ever will be, divided by 21 million. That's Bitcoin.
Bitcoin Adoption by @CuredSausage
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