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Three Important Aspects To Evaluate Within The Cryptocurrency Market

By Rubikkav | Rubikkav Insights | 7 Aug 2022


The price of bitcoin continues with lateral movements for three weeks around USD 22,500. Despite a slightly declining trend over the last seven days, the bitcoin price has managed to break above the 200-week moving average (200W MA) again. This metric has acted as a support line for the price since the beginning of bitcoin trading, although the price has occasionally breached this line for short periods.

Analyst Scott Merkel points out in his report on Friday, August 5, on the bitcoin market, commented by CriptoNoticias, that it is important that at the end of this week the price remains above the 200-week average. At the time of writing, the 200W MA is $22,842, while the bitcoin price is $23,157.

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As can be seen in the graph, the price of bitcoin crossed the 200W MA (in blue) in decline in mid-June and has fluctuated around it, until it exceeded it for the last time last Friday the 5th, despite the bearish trend of the last 7 days. Another important moving average, the 50-day (in red) was also broken by the price towards the end of July and marks the $21,442 level.

In any case, it is important to evaluate three important aspects that happened during the week:

Bitcoin Purchase Increases in the United States of America

In a bear market for bitcoin (BTC) and cryptocurrencies, such as the one that has been experienced in recent months, one can expect a flight from investors, but in the case of Americans, the opposite has happened.

In fact, the volatility in the price of bitcoin has been an incentive for 40% of investors in the United States to buy more digital assets, according to a survey by The Balance.

“Cryptocurrency buyers are bucking the trend of fleeing for safe havens in times of market volatility,” the firm highlights.

distribución de los principales medios de inversión de los estadounidenses

On the other side of the sidewalk, there are investors who prefer to invest in shares of the stock market, representing 41% of those consulted. These could be motivated "by the ability to buy the fall," says the report.

While 34% of those consulted have not made changes to their investment portfolio.

All these movements are being fueled by the rising inflation experienced by the United States, the highest in 40 years, and the scenario of an economic recession.

Recession And Inflation Generates Nerves

The report confirms that investors "have been nervous as inflation continues near 40-year highs, putting further pressure on the Federal Reserve to raise interest rates to reduce inflation."

stagflation or recession inflation is a situation in which the inflation  rate is high but the economic growth rate slows 6966704 Vector Art at  Vecteezy

15% of those surveyed said they are stopping investing because they have less money, while 9% said they are worried about inflation. Another 9% said they wanted more cash on hand in the face of potential recession risks.

The survey revealed that those who are at the forefront of investments in crypto assets are the youngest. Members of the so-called millennial (born between 1981 and 1996) and generation Z (born between 1995 and 2000) generations said they lean towards cryptocurrencies, compared to just under a third of investors who are Gen X (born between 1965 and 1981) or older.

Miners Are Making More Money With Ethereum

The month of July was more profitable for Ethereum miners than for Bitcoin miners. If their income is measured in dollars, those of Ethereum generated USD 652 million in total, while their bitcoiner peers reached USD 597 million.

According to statistics published by the analytics firm Glassnode, the variation in the profitability of Ethereum miners between June and July was approximately 10% down. In June, they had generated a total of USD 725 million.

For their part, and as CriptoNoticias reported, Bitcoin miners earned 16% less in July compared to the previous month. His earnings went from USD 667 million to USD 555 million.

Ganancia de mineros de Ethereum y Bitcoin

Beyond the differences between the two months, there is a figure that is repeated. In both June and July, Ethereum miners made more money than Bitcoin miners.

In general, July was not one of the most productive months for cryptocurrency mining. Context has a lot to do with this, given that the crypto assets made by offering processing power to the network do not have as much market value (measured in US dollars) as in previous months.

By analyzing the market value of the cryptocurrencies of both networks, ether (ETH) and bitcoin (BTC), this circumstance can be better understood. Bitcoin had started June hovering around USD 30,000 in its price, but closed the month of July worth almost 20% less, with a price of USD 23,800.

Ether, for its part, has not had such a sharp decline in its price. Going from approximately USD 1,900 at the beginning of June to USD 1,700 at the end of July, the decrease is 10%, half of what bitcoin fell in the same period. As can be seen, both percentages largely coincide with the reported drop in miner earnings.

Ethereum In full Rally Outperforms Bitcoin

The bullish rally of ether (ETH) is getting more and more interesting. So much so that the native cryptocurrency of Ethereum has managed to outperform bitcoin (BTC) in one of the most useful market metrics for valuing the cryptocurrency.

That metric is the MVRV (Market Value to Realized Value). This is the ratio of market capitalization to effective capitalization. That is, the comparison between the market value of all the BTC or ETH in circulation with respect to its exchange value the last time they moved in a transaction, as described by the analysis firm Coin Metrics.

ethereum-bitcoin.png

Right now, according to a report from the same source, the ETH index is at 1.12 in its 7-day average, while the BTC index is at 1.07. Ethereum, then, is trading above its “fair value”, also described by some analysts as the “fair price”, in a larger range than BTC.

Both cryptocurrencies are in a positive range today, but ETH is having very positive returns and higher than BTC in recent weeks. This is mainly due to the expectation that is being generated in the market around the imminent upgrade of its network to Ethereum 2.0 and that it will eliminate mining to replace it with a new consensus mechanism.


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