Hey, Bitcoin, what’s going on?
Sometimes you stand there wondering, what’s happening with the world? Where are the classic markets going? Why is the sky blue? And then you remember about cryptocurrencies, and it seems that this could be your salvation. You open a Bitcoin chart and, it seems, everything is fine – the price is growing. You open the economic calendar to read the news, and you are in disarray.
Two completely contradictory pieces of news: the global trading volume of Bitcoin more than halved in April, and then you read something saying that Bitcoin is breaking the record for daily transactions. How is that possible? Let’s figure this out.
Bitcoin trading volume has decreased by almost 60% compared to previous months. And as of April 14, its rate reached $31,000. We saw such a price for the last time on June 8, 2022, at the moment when the price went to the next round of falling. We can jump to the conclusion that a significant drop in trading volume after a sharp rise in the rate may indicate that investors are taking a wait-and-see approach or transferring their capital to other cryptocurrencies.
By the way, the same low volumes were in June of the same 2022. Coincidence…?
Well, for now, let’s forget about the second piece of news and deal with the first in more detail.
Obviously, the last jump in volumes occurred along with the price increase. And before that, there was a drop from February 21 to March 10. It was on February 21 that the price tested the resistance of $25,000, which had been holding since August 2022. The bears responded aggressively, while the bulls did not insist. But they were cunning and hid like elves in the branches of trees. As soon as the last small players fell off, not expecting such impudence, the price sank even lower, to $20,000, as it seemed, below the support in the $22,000 area. But at that moment the bulls made their move and, gathering their strength into a fist, made a breakthrough. Behind was the resistance of $25,000…
And this is where volumes dropped. Neither bears nor bulls did anything to continue the active struggle, and the price froze at around $28,000 per coin. A kind of stagnation. As mentioned earlier, investors decided to bide their time to keep their earnings. But how is it that the trading activity has decreased, but the price has not? Surely a decline must follow? And here you gradually begin to understand how the second, seemingly absurd news is connected with this. This is the thread leading you to the answer.
Bitcoin broke the record for daily transactions amid growing interest in serial number protocols, which expands the use of its blockchain. Feel free to take a look at the BTC chart.
If earlier the amounts of sent transactions were mostly in the range of $1,000 to $10,000 dollars, now they have become much less. Not just less. Disastrously less! Because most of them were about $1 dollar. One single dollar. OMG.
Approximately half of all transactions during this period came from serial number protocols, which allow users to embed data on the Bitcoin blockchain – fairly similar to NFTs.
In short, it expands the network’s user base, allowing members to transact limitless transfers or simply invest in cryptocurrencies.
And the name of this phenomenon is Bitcoin Ordinals. Someone even already managed to dub it the cryptocurrency abolition of the “Gold Standard”. And this makes sense. More and more investors and large companies are turning away from Bitcoin as a store of wealth or a long-term investment. And they turn to speculative methods of using it.
In addition, according to the latest rumors, the United States is considering introducing a 30% tax on electricity for the mining of any digital assets for cryptocurrency miners. It’s all about another attempt to minimize the harmful effects of this industry on climate change. Bitcoin consumes more electricity annually than all of Argentina. Think about it – that’s about 121.36 terawatt-hours of electricity per year. Experts believe that this number is unlikely to decrease in the near future. Carbon footprint to the moon and back.
And given that the United States is a popular place to mine Bitcoin, this does not bode well. Therefore, everyone is trying to move into trading, rather than mining or accumulation.
We think it is now clear why there is such a strange connection between these phenomena and the price. But in fact, the Devil is not so black as he is painted.
For regular traders, the changes will be minimal. The price is unlikely to change its dynamics and start moving in some other way. We still have the same levels, the same news, and the same market participants. Although they will operate according to other schemes, nothing will change.
We already know where there is a resistance of $31,000. This is the main goal for bulls, and it is important for them to break through it and open their way to new highs. The support is also extremely clear. It is worth adding, in addition to $25,000, which has become a mirror, another new $27,000, which has already bounced the price back several times. Therefore, the following movements are understandable for both parties.
For bulls, this could be a quick upside breakout for consolidation above $31,000 and using it as support.
Or a rollback of $25,000 – $27,000 and, as they say, “into battle with new forces”.
Bears, on the contrary, can allow testing $31,000 again and go for a breakdown of $25,000 – $27,000 with the potential for a further fall.
In any case, it is clearly not worth drawing hasty conclusions. It is better to take a closer look at Bitcoin Ordinals. Observe how the market will behave and how to react to upcoming news. Who knows, maybe we have a great future. Cars will fly, and we will be stuffed with electronic prostheses and pay for goods with the power of thought. Or a great disappointment and all adherents of the cryptocurrency bubble theory rejoice.
