I'm kind of amazed that the Bitcoin price wasn't affected more given this event as well as the larger macro events with the stock markets, Fed and inflation.
Well, the value that collapsed was the exchange rate of BTC to LUNA, which is now at fractional cents per coin after hyperinflation... They kind of gave a $3B liquidity exit for holders to dump their LUNA tokens into via the LUNA/BTC pairs that they were market making
A lot of speculation that not all of this btc was actually sold. Sure it was transferred to an exchange but know one really knows what happened after that.
Yeah, the previous crashes have been a lot more violent. The current bubble is definitely over though. Bubbles come like clockwork every 4 years (due to the 50% supply cuts every 4 years) it would be interesting to see if it happens again.
Though an earlier bubble could be kicked off when ethereum cuts it's supply by 90%.
with bitcoin hovering ~$30K, still seems like there's air in the bubble. a 50% drop (from $60K) is pretty normal for bitcoin. It could drop a lot more without shaking the confidence of the hodlers
Not quite. Bitcoin difficulty adjusts every 2000 blocks, which typically happens every two weeks. If the hashrate drops, those blocks happen less often, so the adjustment happens less often.
These past years the Bitcoin ASICs have been tremendously profitable, and as a result the demand for the hardware goes up, leading to huge profits for the hardware makers. These past few months have seen a drop in Bitcoin, which drops the profit for miners, but as it is still above electricity prices, only results in cheaper hardware.
If Bitcoin drops below the electricity line, you will see miners all over the world start to turn off their devices. And once that happens, block time will rise, and that will start making the entire network less trusting. This will cause a spike of people selling their coins, and with less blocks this means a packed exit. With the packed exit, you would think this would incentivize mining as transaction fees go way up, but those fees come directly from the value of the coin, so once this starts the value of the coin is going to drop heavily.
With mining profitability dropping the further this goes, the longer block times, the more the price of Bitcoin goes down. If Bitcoin goes below 10k quick enough, it won't ever see another difficulty adjustment, and the entire chain dies. The developers might chose to hard-fork and change the difficulty changes algorithm, but as we've seen with Bitcoin Cash, these changes are political and don't tend to end well.
This all sounds good on paper, except for the fact that large miners don't sell their bitcoin. Even when they do, it isn't on the open markets and happens in ways that don't affect the price (OTC) and by selling options.
Miners are also large holders of Bitcoin in addition to mining and those bitcoins are likely leverage then to buy equipment.
As the bitcoin price drops , they will have more margin calls and new coins are not that profitable. You can expect lot of mining sales to happen and orders get fullfilled as selling the equipment becomes more attractive.
Some of the smaller/more leveraged ones will definitely fail at long term prices of say 20k or less .
If mining becomes a major expense because the price of bitcoin is too low to recoup the cost of electricity how long would it take for the difficult to adjust?
If miners and shutting down during that time I'd expect the time between blocks to increase.
There have been massive advancements in the use of various options, futures and other structured
products specifically designed to
increase optionality for Bitcoin miners to weather bear markets without closing up shop.
This is definitely a proving ground and
only those mining operations with the
most resilient strategies will survive.
Many will continue to thrive.
The future outlook on the crypto
markets enters a new era towards the
end of this year.
Fidelity is introducing cryptocurrency
investment services to all of its 401K
investors, every company 401k, across
the $2.4 trillion in 401(k) assets they
represent (in 2020, or more than a third
of the market at the time).
They will allow individuals to allocate up to 20%
of their portfolio to cryptocurrency, for those who participate.
Not at all what I said or think. I only mentioned this current bubble is over. I'm not talking about the next one.
It most likely won't hit $60k this year, but there is a new bubble like clockwork every 4 years. And like I said, another bubble could be kicked off earlier when the ethereum emission drops 90%. That could drag bitcoin up a bit and trigger an early start to the next bubble.
> But I'm just very conservatives in my predictions
Which were ultimately based on what exactly? See, TA in this space is the demarcation of those who know exactly nothing, but feel the need to contribute their misinformed opinion: short of being a whale who can make the market move (Bearwhale) I doubt you really have anything of substance to base your opinion.
And even then it's literally impossible to call a high, I've been in this for over 10 years and the 'price discovery' mechanism is really just not there. And most of the innovative stuff happens during times when the price is low.
Consider two things: Mining/Hashing power is at ATH, and we just 2x the amount of nations who have adopted its a national currency--with more expressing interest and are meeting with the President of El Salvador as we speak.
And yet we are sub 30k... again, I think no one knows anything about what the price will do, but that doesn't stop people for relying on conjecture to explain x, y, z event in this space.
Tether was a joke, and Luna was a scam... what this has to do with BTC is entirely lost on anyone with any semblance of knowledge: they dumped BTC, sure, but that is like conflating what Pellaton's stock price drop means for Apple's long term viability.
Unweathered protocols on eth failing shouldn't affect bitcoin. They're only related insofar as they are both crypto. The $3B in bitcoin sold could have been anything.
