Coinbase’s quarterly earnings exceeded expectations as the leading crypto exchange posted a 44% increase in monthly user growth since the last quarter.
At the same time, the Bitcoin hash rate has recovered spectacularly after the recent miner exodus from China – so much so that the Bitcoin Hash Ribbon suggests that a long-term low is likely to be imminent for BTC / USD.
Let’s dig in.
In its quarterly earnings call for 2021, Coinbase announced that the company exceeded expectations with sales of over $ 2.23 billion – a number well above the expected $ 1.78 billion, according to a CNBC report .
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BTC / USD hash ribbons flash buy signal
One of the most famous and effective signals to buy Bitcoin, the hash ribbon, just flashed a “buy signal”. The indicator has a historical effectiveness of almost 100%, an average return of 4157% and an average downside risk of -11% (measured since the introduction of Bitcoin).
What is the Bitcoin hash rate?
Before we look at the hash bands indicator, let’s briefly go over the basics of bitcoin hash rate.
Put simply, hash rate is the amount of processing power miners are contributing to the Bitcoin network at any given time.
The hash rate increases as more miners compete for Bitcoin mining. Usually this happens when the dollar price of bitcoin is relatively high as there is a good incentive to mine bitcoin (or when there is a cheap difficulty adjustment). The hash rate can also increase when the cost of electricity is low relative to the price of Bitcoin.
On the other hand, the hash rate usually tends to decline when the Bitcoin price drops or when the price stagnates for a (relatively) long time (until game theory kicks in). When this happens, miners often take their resources elsewhere, as was the case with the recent Chinese raid on the mining sector (although it was politically motivated).
In other words, Bitcoin mining activity is declining because it is less profitable for miners.
What is the diamond band?
The Hash Ribbon indicator is a long term signal used to indicate macro lows for the USD denominated price of Bitcoin. It was created by Charles Edwards, who describes its inner workings in this article.
The basic interpretation is that the blue dot signals that the higher low (USD 29,300) previously printed on the daily chart was a macro low in the market.
In other words, the daily low before the “buy” signal sets a minimum price that BTC is unlikely to ever return to in the future (according to this indicator).
Historically, all but one of 12 signals are marked macro Bitcoin price lows. However, the past is of course not a guarantee for the future, but a further consideration for an informed decision-making under risk.
Is another old season just around the corner?
This is where it gets tricky. After ringing the alarm bells regarding crypto bubbles in May, I stayed largely silent about altcoins, largely due to the fact that trading ALT / BTC pairs is not for everyone. In fact, it’s probably not a good idea, but when has that ever stopped an honest bettor in good standing from doing the Lord’s work?
Jokes aside, take this analysis with caution.
With that, the Bitcoin Dominance Chart, which compares Bitcoin’s market capitalization to other cryptocurrencies, has broken out of an ascending wedge that coincides with the weekly Bollinger Band resistance. Assuming BTC.D will not print new lows, this provides an opportunity for altcoins to rebound against Bitcoin until BTC.D bottomed out. More aggressive targets would target new lows below the 2018 level marked on the chart. That possibility wouldn’t be uncommon as Ethereum’s EIP-1559 upgrade is now live.
Needless to say, altcoins are likely to suffer a worse fate than death unless BTC / USD travels upward. And even as BTC / USD heads towards higher highs, there is no guarantee that altcoins will do better until new all-time highs are printed.
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