Home CryptoMarket GBTC next BTC price black swan? — 5 things to know in Bitcoin this week

GBTC next BTC price black swan? — 5 things to know in Bitcoin this week

by CryptoFan
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Bitcoin (BTC) starts a new week in November 2020 after its lowest weekly earnings in two years.

The largest cryptocurrency, like the rest of the crypto industry, remains highly sensitive to downside risks as it continues to grapple with the impact of the implosion of exchange FTX.

Like the Terra collapse earlier this year, contagion is on everyone’s lips as November approaches, and there are fears that new victims of FTX’s massive liquidity vortex will continue to emerge.

The stakes are clearly high. The initial shock may be over, but the consequences are just beginning to surface.

These include issues beyond just financial losses as lawmakers attempt to tackle FTX and put new emphasis on urgent Bitcoin and crypto regulation.

So it’s no wonder that price action across crypto assets is weak at best – and there are many voices claiming the worst is yet to come.

Cointelegraph takes a look at some of the key factors to keep in mind when it comes to BTC price performance this week.

FTX Contagion Turns to GBTC

With the fate of FTX executive and former CEO Sam Bankman-Fried clouding, commentators and crypto investors wonder where the epidemic will strike next.

Sentiment suggests that everyone expects the worst. A good example comes in the form of Genesis Trading, part of the Digital Currency Group (DCG) conglomerate, which last week stopped payments in its crypto lending sector.

This has sparked a series of rumors not only about Genesis’ solvency, but also DCG’s future. Reassurance from executives could not deter a narrative that also focused on the largest institutional Bitcoin investment vehicle, the Grayscale Bitcoin Trust (GBTC).

Thus, over the weekend, the growing debate over GBTC devolved into a full-blown panic over financial buoyancy.

As reported by Cointelegraph, this was compounded by Grayscale’s refusal to provide address details to prove its BTC reserves for security-related reasons.

Alleged over $1 billion Borrowed From DCG to Genesis, it adds to the crucible of anxiety.

At the same time, some well-known investors have increased their GBTC positions in recent weeks.

“Is the next Black Swan GBTC on the horizon?” Hence the trading resource stock lizard queried On Twitter:

“GBTC holds up to 648,000 BTC. As FTX spreads great uncertainty, the grayscale discount rate has dropped to a record 43%. There is a lot of hysteria in the market, Everyone is looking for a reason for 10,000 Bitcoins. Calm down, the bear market is over in winter!”

Further controversy has focused on GBTC’s discount to the Bitcoin spot price, which has reached almost 50% for the first time ever.

GBTC premium vs. holdings vs. BTC/USD chart.Source: Coinglass

Arthur Hayes, former CEO of exchange BitMEX, said: with flag A July blog post ventured to say that DCG worked with defunct trading firm Three Arrows Capital (3AC) to “extract value from GBTC premiums.”

Coinbase, which vouched for Grayscale’s legitimacy last week, was a potential target for Timothy Peterson, investment manager at Cane Island Alternative Advisors.

“For everyone wondering about holding $GBTC Grayscale: why not short $COIN @coinbase?” he adventured On Twitter:

“They are custodians and they will be committing fraud. COIN is 10 times the size of GBTC. Stocks will go to 0 and executives will go to jail. I will probably go.”

Meanwhile, BitGo CEO Mike Belshe has firmly pinpointed the GBTC situation and FTX’s responsibilities to the US regulator, the Securities and Exchange Commission (SEC).

“By failing to create a Bitcoin ETF, the SEC: – Grayscale -> allowed GBTC trading to tear retailers apart for over 5 years – Created a negative premium for GBTC – Most cryptocurrencies Forced trades out of U.S. jurisdiction – FTX scam hit millions of Americans shouldn’t have happened,” he said wrap up Part of a Twitter discussion.

A related FTX development has seen hacked funds from the exchange move, converting tens of thousands of Ether (ETH) into BTC this weekend.

Numerical Downside Risk

Bitcoin is naturally between a rock and a hard place in the current situation.

BTC/USD has failed to break out since FTX exploded, testing levels not seen in two years and calling for more capitulation.

The question for traders and analysts is how long this capitulation will last.

As reported by Cointelegraph, the goals for this winter are $13,500, $12,000, and even under $10,000.

According to data from Cointelegraph Market Pro and Cointelegraph Market Pro, Bitcoin was at its weakest since November 2020 at around $16,250. TradingView indicate.

BTC/USD 1-week candlestick chart (Bitstamp).Source: Trading View

“Volumes go down. Bollinger bands squeeze on many timeframes. Something has to give.” Analyst Matthew Hyland warned Before closing.

A look at the volatility on the daily chart showed the Bollinger Bands widening as of writing on Nov. 21, with price testing the lower bands.

BTC/USD 1-day candle chart (Bitstamp) with Bollinger Bands.Source: Trading View

Nonetheless, short-term upside targets included a return to the latest CME Bitcoin futures gap of around $16,500.

Fellow trader and analyst Crypto Tony likewise called for restraint on bearish sentiment on BTC/USD even though the pair is trading below $16,000.

“Look for a close below the low of the range before you start getting excited about the short,” he said. Said Twitter followers of the day:

“Now we are still in the same boat as the last few days….Patience.”

BTC/USD annotated chart. Source: Crypto Tony/ Twitter

Axel Kiber, meanwhile, offered a more conservative outlook, warning that history could repeat itself in the form of Bitcoin repeating its year-to-date losses.

One of two charts he uploaded to Twitter that day explained As “a reminder about the recent consolidation and its potential to be a bearish continuation chart pattern.”

Kibar has previously claimed that “the longer the price stays below $18,000, the more likely it is to return to $13,000.”

BTC/USD annotated chart. Source: Axel Kiber/Twitter

Inflation receding Bitcoin

Inflation has been a major topic of discussion for those involved in risky assets in 2022, but when it comes to cryptocurrencies, the issue has been put on the back burner.

FTX and its contagion are putting more serious pressure on price performance than this year’s macro triggers on the shorter timeframe, but behind the scenes, the global economic situation offers an interesting signal.

Inflation in the US already appeared to be receding, but new European numbers suggest Germany, the eurozone’s largest economy, is now following suit.

Producer Price Index (PPI) data, released on November 21, fell short of expectations, even retreated, turning negative instead of growing further.

“Producer prices fell 4.2% in October 2022 compared to September 2022. This was the first month-on-month decline since May 2020 (-0.4% in April 2020). )”, official press release said.

German producer price index (PPI) chart. Source: Federal Statistical Office (Destatis)

A dramatic turnaround in inflationary conditions would escalate the likelihood of a recovery in risk assets. Meanwhile, the US dollar continues to struggle and has yet to reach its 20-year high.

For popular analytical resource Game of Trades, it’s “game over” for the US Dollar Index (DXY). broke through 100-day moving average for the first time since April 2021.

1-day candlestick chart of the US Dollar Index (DXY) 100 MA.Source: Trading View

Miner sales cool, new difficulty hits all-time high

Even all-time highs rather than lows are struggling to gain acceptance among Bitcoin enthusiasts in the current situation.

Internally, Bitcoin is busy expanding network security, but concerns about the numbers persist.

Bitcoin Network Difficulties With Latest Automatic Recalibration On November 20th gain It increased by 0.51% to a new record high.

An overview of the basics of the Bitcoin network (screenshot). Source: BTC.com

Mining difficulty reflects competition among miners. Currently, the indicator is rising despite the downward price action of BTC. This suggests that some entities are deploying more hashing power in the network and can miss lower profit margins.

But some warn that if resilience is low, “capitulation” may follow. In response to the new difficulty level, Colin Talks Crypto called It’s a “perfect storm” for minor upheavals.

“Only the strongest can withstand this extreme pressure,” he added.

Nonetheless, miners are selling less than their annual average over the last few days, indicating a possible less pressing need to reduce reserves.

Data from CryptoQuant’s Minor Positions Index (MPI), an on-chain analytics platform, shows a spike after FTX returned to normal.

Bitcoin Minor Position Index (MPI) chart. Source: CryptoQuant

bottom timing

Those who were in the midst of the last crypto bear market are struggling to return to their long-term glory.

RELATED: Bitcoin Sees Record Stock-to-Flow Mistakes – BTC Price Model Creator Cleans Up FTX ‘Blip’

BTC/USD is now past its latest all-time high and is now in a good number of weeks to set new macro lows as indicated by popular Twitter account Mustache.

Compared to both 2018 and 2014, 30 months will take longer for that event to actually happen.

BTC/USD annotated chart. Source: Mustache/Twitter

plus mustache with flag Bitcoin’s MVRV-Z Score Indicator Nearing Current Levels Synonymous with all macrobottoms.

“Everyone is wondering where the bottom of Bitcoin is. The MVRV Z-score has always proven to be very accurate in the past and can answer this question,” he said. I am writing with a screenshot of the -Z score chart.

“Every time the Z-score deviated from the green channel, the bottom was at $BTC. We are very close.”

BTC/USD MVRV-Z score annotated chart. Source: Mustache/Twitter

Comparing the timeframe from 4 years ago when BTC/USD bottomed out at $3,100 in December 2018, while fellow account Bleeding Crypto nevertheless said price action started the bottoming process. He said he had just done it.

“You know how it took me five weeks from when I started surrendering in 2018 to finally hit bottom?” he said. clearly:

“Then it took me four months of BORING PA to see the first God’s Candle. Today is finally week two. This is a marathon, not a sprint. Don’t worry, you’re almost there.”

BTC/USD 1-week candlestick chart (Bitstamp).Source: Trading View

The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. All investment and trading movements involve risk. You should do your own research when making a decision.