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TA: Here’s Why Bitcoin Price Is Primed To Revisit $52K Support

Bitcoin price struggled to recover above $57,500 against the US Dollar. BTC is now declining and it remains at a risk of more downsides towards $52,000.

  • Bitcoin is facing an uphill task above the $57,000 and $57,500 levels.
  • The price is now trading well below the $57,000 level and the 100 hourly simple moving average.
  • There is a key declining channel forming with resistance near $56,000 on the hourly chart of the BTC/USD pair (data feed from Kraken).
  • The pair is likely to continue lower towards $53,000 and $52,000 in the near term.

Bitcoin Price Resumes Decline

Bitcoin started a decent recovery wave above the $55,000 resistance zone. BTC broke the $56,500 and $57,000 resistance levels.

There was a break above the 23.6% Fib retracement level of the downward move from the $63,750 swing high to $51,150 swing low. However, the bulls faced an uphill task near the $57,500 level and it also remained well below the 100 hourly simple moving average.

It seems like bitcoin was rejected near the 50% Fib retracement level of the downward move from the $63,750 swing high to $51,150 swing low. It is now trading well below the $57,000 level and the 100 hourly simple moving average.

Bitcoin Price

Source: BTCUSD on TradingView.com

There is also a key declining channel forming with resistance near $56,000 on the hourly chart of the BTC/USD pair. If there is a downside break below the channel support at $54,000, there is a risk of a drop towards the $53,000 support zone. The next major support is near $52,000, where the bulls might take a stand.

Upsides Capped in BTC?

If bitcoin remains stable above the $54,000 level, it could attempt an upside break. The first key resistance is near the channel trend line at $56,000.

An upside break above the channel resistance could open the doors for a move towards the $57,500 resistance. The next major hurdle for the bulls could be $58,000 or the 100 hourly simple moving average. A close above the $57,500 and $58,000 levels is must to change the current bearish bias in the near term.

Technical indicators:

Hourly MACD – The MACD is slowly gaining momentum in the bearish zone.

Hourly RSI (Relative Strength Index) – The RSI for BTC/USD is now well below the 50 level.

Major Support Levels – $54,000, followed by $52,000.

Major Resistance Levels – $56,000, $57,000 and $57,500.

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Morgan Stanley Says Central Bank Digital Currencies Not a Threat to Cryptocurrencies

Morgan Stanley Says Central Bank Digital Currencies Not a Threat to Cryptocurrencies

Major investment bank Morgan Stanley believes that central bank digital currencies are not a threat to the existence of cryptocurrencies. The bank believes that both types of digital currencies can coexist because they serve different purposes and have different appeals.

Cryptocurrencies and CBDCs Can Coexist

Morgan Stanley’s analysts, including chief economist Chetan Ahya, discussed the impact of central bank digital currencies (CBDCs) on bitcoin and other cryptocurrencies in a report published last week. They wrote:

Cryptocurrencies will still exist, as they continue to serve other use cases … For instance, some cryptocurrencies can function as a store of value … as some segments of the public do not place their full faith in fiat currencies.

The analysts explained that the uses and appeals of central bank digital currencies and cryptocurrencies are different. They added that cryptocurrencies can be both a store of value, similar to gold, and a speculative asset.

A growing number of people have said that bitcoin is a store of value, including the pro-bitcoin U.S. Senator Cynthia Lummis and the Federal Reserve Bank of Dallas President Rob Kaplan.

Regarding why investors are increasingly interested in bitcoin and other cryptocurrencies, the Morgan Stanley analysts described:

Investors’ interest in cryptocurrencies has risen alongside the unprecedented monetary and fiscal policy response to the pandemic.

In contrast, Morgan Stanley said in the report that government-backed digital currencies probably pose the biggest risk to stablecoins.

A growing number of central banks are increasingly interested in issuing their own digital currencies. The Bank of International Settlements (BIS) says 86% of the world’s central banks are studying digital currencies in varying stages.

Morgan Stanley believes that CBDCs would be quite different from cryptocurrencies as they are unlikely to use blockchains. The European Central Bank (ECB) has similarly said that CBDCs have little to do with cryptocurrencies, which the bank sees as speculative assets and not actual currencies.

Do you think cryptocurrencies and central bank digital currencies can coexist? Let us know in the comments section below.

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One of the biggest Bitcoin miners says Ethereum will soon cross $5,000

The owner of one of the world’s biggest mining pools says Ethereum (ETH) could reach the $5,000 to $6,000 range this bull run, as per Chinese news outlet Wu Blockchain.

Li Tianzhao, the co-founder of mining firm Poolin, said that the impact of the upcoming Ethereum Improvement Proposal (EIP)-1559 on miners would be “almost negligible.”

“In the short term, it is estimated that the income of ETH miners drop by 10% to 20% after EIP-1559, but the entire ecosystem will benefit, the price will be reflected, and miners also get the benefits of MEV,” he stated.

As per markets tool CoinGecko, ETH currently trades at $2,090—meaning a 2.5x increase is on the card for traders who bet on higher prices ahead of the EIP-1559. That would, in turn, peg the network’s market value at over $600 billion, up from its current $244 billion.

Unpacking EIP, MEV, and what they mean for Ethereum

For the uninitiated, “miners” are entities with huge computing power at their disposal who validate and process transactions on a proof-of-work blockchain, such as Ethereum. They receive ‘rewards’ in return (in the form of ETH in this case) for using their resources for the betterment of the network. 

In recent times, ‘gas’ fees—ETH paid by network participants for transacting on Ethereum—have become a concern due to their perennial high pricing. Average network fees top $50, making it nearly unusable for smaller account holders.

The EIP-1559 is a proposal to combat just that. Scheduled this July as part of the ‘London’ hard fork, any ‘gas’ paid by the user would be ‘burned’ out of circulation forever, with only an optional ‘tip’ paid to miners.

But while burning ETH out of circulation forever would mean higher prices, it would also mean potential losses for the miners, who may end up spending more money on their mining rigs (the building, maintenance, labor, etc), than earning rewards.

And that’s where the MEV, short for miner extracted value (MEV), comes in. A new-ish term, this theoretically involves miners taking advantage of transactions by “front-running” trades and turning a profit.

The post One of the biggest Bitcoin miners says Ethereum will soon cross $5,000 appeared first on CryptoSlate.

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Federal Reserve Bank President Says Bitcoin Is Clearly a Store of Value

Federal Reserve Bank President Says Bitcoin Is Clearly a Store of Value

The Federal Reserve Bank of Dallas president says bitcoin is clearly “a store of value.” Emphasizing the differences between cryptocurrencies, like bitcoin, and central bank digital currencies, he said the latter “won’t necessarily be a store of value.”

Fed Bank Chief Calls Bitcoin a Store of Value

The president of the Federal Reserve Bank of Dallas, Robert Kaplan, talked about bitcoin and central bank digital currencies (CBDCs) Friday at the Texas A&M Bitcoin Conference 2021 hosted by Mays Business School.

Firstly, Kaplan explained that he would distinguish between bitcoin and central bank digital currencies. “I would differentiate between a cryptocurrency, like bitcoin, and the discussions that are being had about digital currency,” such as the digital yuan experiment in China, he described.

He proceeded to explain that the challenge on bitcoin is “how widely it will be adopted.” The Federal Reserve Bank of Dallas chief elaborated:

Right now, it’s clear it’s a store of value.

“It obviously moves a lot in value,” he continued. “That may keep it from spreading too far as a medium of exchange and wide adoption but that can change and that will evolve.”

The Fed bank chief also confirmed that he and his team “have studied intensely and will keep studying bitcoin and other cryptocurrencies.”

He then talked about central bank digital currencies, emphasizing:

The discussions around the world on digital currency are slightly different in that a digital currency won’t necessarily be a store of value.

“If you’re worried about the value of underlying currency, digital currency is likely to be, for example in China, tied to the value of the underlying,” he detailed, adding that it’s also “a way of ease of payment, domestic payments first, getting money to where it’s needed.”

Kaplan further opined: “In some cases, you could argue in China it’s a way to monitor flows … and then ultimately how far will this go, and there’s been speculation about global payments and the implications.”

As for the digital dollar, Federal Reserve Chairman Jerome Powell said in February that the Fed is actively studying the possibility of issuing a digital dollar. He emphasized that it is a “very high priority project” for the Fed. Meanwhile, the Federal Reserve Bank of Boston and the Massachusetts Institute of Technology (MIT) plan to unveil at least two prototypes of a digital dollar in the third quarter of this year.

What do you think about what the Dallas Fed president said about bitcoin? Let us know in the comments section below.

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Coinbase Addresses Future Revenue Concerns With Plans to Become Crypto’s Amazon

A well-received Nasdaq debut from Coinbase last week opens what many hope to be crypto’s cross into the mainstream. Nonetheless, controversy has surrounded its IPO, including valuing the firm on a fully diluted basis. Using this methodology, a higher number of shares is included in the company valuation, essentially overvaluing the company by some $20bn.

But perhaps the biggest controversy lies in Coinbase’s ability to maintain and extend its profitability going into the future. With concerns that high spreads and trading fees will see a race to the bottom as the competition heats up, some analysts have warned against investing in $COIN.

Coinbase CEO Brian Armstrong said he plans to increase the firm’s product lineup over the next five to ten years in a bid to combat these concerns.

Coinbase hourly chart

Source: COINUSD on TradingView.com

Analysts Sound Alarm on Coinbase Future Profitability

In the run-up to last week’s IPO, Coinbase released its Q1 2021 figures, revealing an impressive set of numbers. Highlights include $1.8bn revenue and the doubling of its monthly active user base to 6mn.

Its biggest money-spinner is trading fees, which came in at $1.1bn and accounted for 86% of its total revenue last year. This equates to 0.57% of every transaction.

“In 2020, Coinbase collected about 0.57% of every transaction in fees, which totaled $1.1 billion in trading revenue on $193 billion in trading volume. These trading fees made up 86% of revenue in 2020.”

But competition from the likes of Kraken, Gemini, Bitstamp, and Binance, will see trading fees fall away in a race to the bottom. Some analysts have pointed out, based on Q1 2021’s figures, this is already in motion.

“If we assume a similar breakdown of Coinbase’s reported $1.8 billion in total revenue in the first quarter of this year, trading fees would equal around $1.5 billion on $335 billion in trading volume, or about 0.46% of every transaction.”

To address this, Coinbase CEO Brian Armstrong said he expects 50% of the company’s revenue to come from non-trading sources over the next five to ten years. But is this a reasonable expectation?

The Amazon of Crypto

Speaking to Laura Shin, Gil Luria, the Director of Research at D.A. Davidson, said the goal is to generate more revenue in custody and managed staking. But he conceded that this wouldn’t happen overnight.

In terms of achieving the switch to 50% of revenue from non-trading sources, Luria was confident that Coinbase could pull this off. He likened this situation to what Amazon has managed to pull off since its IPO.

In 1997, Amazon was an online bookseller. Not only did it diversify into selling anything and everything, but the firm also helped other people sell, moved into entertainment with Prime, and set up a cloud business.

“Jeff Bezos may have imagined it but we sure didn’t. We just knew Amazon was way ahead of the pack. They had tremendous leadership and they were so customer-centric, which was the absolute key to their success. And I see a lot of parallels with Coinbase.”

By understanding the crypto game and being open to working with regulators, Luria thinks Coinbase is in a good position to bring to market more products to replicate what Amazon did.

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China Calls Bitcoin and Stablecoins ‘Investment Alternatives’ for the First Time Since Crypto Crackdown

China Calls Bitcoin and Stablecoins as 'Investment Alternatives' for the First Time Since Crypto Crackdown

After the well-known crypto crackdown launched by the Chinese government four years ago, it seems there is now a change in the tone from the country’s central bank. At least that’s what has been suggested recently by the deputy governor of the People’s Bank of China (PBoC).

Central Bank Clarifies Its Regulatory Framework on Cryptos Will Remain Unchanged

During a panel hosted by CNBC at the Boao Forum for Asia, Li Bo is now naming bitcoin (BTC) with the “investment alternative” term for the first time since the crackdown. However, he made some clarifications on the meaning of his stance towards cryptocurrencies:

We regard Bitcoin and stablecoin as crypto-assets. These are investment alternatives. They are not a currency per se. And so, the main role we see for crypto assets going forward, the main role is investment alternative.

Such a statement implies an unprecedented change in Beijing’s tone on cryptos, even with experts quoted by CNBC considering these comments as “progressive,” as the country is also paving the way for the forthcoming digital yuan.

Li continued to elaborate on cryptocurrencies as investment alternatives:

Many countries, including China, are still looking into it and thinking about what kind of regulatory requirements. Maybe minimal, but we need to have some kind of regulatory requirement to prevent it. The speculation of such assets to create any serious financial stability risks.

Still, he clarified that the PBoC would keep its regulatory framework on cryptos unchanged.

PBoC Expects to Develop Cross-Border Solutions With Digital Yuan

During the panel, the newly-appointed central bank’s deputy governor commented on the digital yuan. He pointed out that “our goal is not to replace the U.S. dollar or any other international currency, as our goal is to allow the market to choose and to facilitate international trade and investment.”

That said, Li unveiled that the PBoC has some plans in regards to developing cross-border solutions with the “e-yuan”:

Our focus, again, is that we want to establish a very solid domestic e-yuan first and build up a healthy ecosystem, at the same time working with our international partners. Hopefully, in the long term, we’ll have a cross-border solution as well.

What are your thoughts on the PBoC deputy governor’s words on cryptos? Let us know in the comments section below.

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Yearn Finance picks up $1 million in YFI as part of planned buyback

Yearn.Finance (YFI), a popular decentralized finance (DeFi) protocol on Ethereum, has bought back $1.164 million worth of YFI tokens yesterday.

Yearn for more

“Yearn has purchased an additional 27.97 YFI for $1.164 million at an average price of $41,621 per YFI,” the Yearn.Finance team said in a tweet.

Yearn.Finance comprises several protocols on the Ethereum blockchain that help users automatically optimize their yields earned on crypto via lending and trading services.

Such buybacks of YFI, the platform’s governance token, are the result of a proposal called “YIP-56” that aims to bring more value to the ecosystem by using YFI staking rewards to buy back YFI on the open market.

Initially, YFI holders could not only vote for new proposals but also stake their tokens, earning yields from them. However, another system was later proposed that would buy YFI back instead.

“Use bought back YFI for contributor rewards and other Yearn initiatives. Retire the YFI governance vault as it no longer has a use, opening up for it to be replaced in the future with a regular vault. Make it possible to participate in Governance even if one’s YFI is being used elsewhere,” the proposal stated in January.

YFI sees price surge

Notably, the price of YFI surged by 14% following the announcement and reached nearly $57,000 today—up from its lows of around $44,000 yesterday, according to crypto metrics platform CoinGecko.

“So it was YFI that crashed the market to get that fill,” one Twitter user ironically pointed out.

However, most of the crypto market continues to decline at press time, with YFI dipping back below the $50,000 mark.

Currently, most cryptocurrencies from the top 10 are sliding into the red zone, Bitcoin (BTC) and Binance Coin (BNB) see the worst losses of roughly 9% and 15% over the past week.

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