5 things to know in Bitcoin this week
FTX contagion turns to GBTC
As clouds swirl over the fate of FTX’s executives and ex-CEO, Sam Bankman-Fried, commentators and crypto investors alike are wondering where contagion will strike next.
Sentiment suggests that everyone is expecting the worst. A case in point comes in the form of Genesis Trading, part of the Digital Currency Group (DCG) conglomerate, which last week halted payouts at its crypto lending arm.
This not only set off a string of rumors over Genesis’ solvency, but also over DCG’s future. Reassurances from executives have failed to stem the narrative, which has also focused on the largest institutional Bitcoin investment vehicle, the Grayscale Bitcoin Trust (GBTC).
Thus, over the weekend, a growing debate over GBTC mushroomed into a full blown panic over financial buoyancy.
Downside risk in numbers
Bitcoin is understandably between a rock and a hard place under the current circumstances.
BTC/USD has failed to catch a break since FTX blew up, testing levels not seen in two years and fielding growing calls for further capitulation.
The question for traders and analysts is how far that capitulation could go.
As Cointelegraph reported, targets include $13,500, $12,000 and even as low as $10,000 or less this winter.
The situation was not helped by the latest weekly close, Bitcoin’s weakest since November 2020 at around $16,250, with fresh losses appearing since, data from Cointelegraph Markets Pro and TradingView shows.
Retreating inflation passes Bitcoin by
While inflation has been the major topic of discussion for anyone involved in risk assets in 2022, for crypto, the issue has taken a back seat.
FTX and its contagion have pressured price performance more acutely than the year’s macro triggers on short timeframes, but behind the scenes, the global economic picture is providing interesting signals.
Inflation in the U.S. was already seen to be retracing, but new figures from Europe suggest that the eurozone’s biggest economy, Germany, is now following suit.
Producer Price Index (PPI) data released on Nov. 21 came in below expectations and even went into retreat, becoming negative rather than growing further.
“Compared with September 2022, producer prices decreased by 4.2% in October 2022. This was the first month-on-month decrease since May 2020 (–0.4% on April 2020),” an official press release stated.
New difficulty all-time high as miner sales cool
Even all-time highs, rather than lows, are having trouble gaining acceptance among Bitcoiners in the current climate.
Under the hood, Bitcoin has been busy expanding its network security — but misgivings about the numbers persist.
At the latest automated readjustment on Nov. 20, Bitcoin network difficulty increased by 0.51% to hit a new record high.
Timing the bottom
Those around during the last crypto bear market are buckling up for a long and drawn-out return to glory.
Related: Bitcoin sees record Stock-to-Flow miss — BTC price model creator brushes off FTX ‘blip’ BTC/USD is now a suitable number of weeks past its latest all-time high to put in a new macro low, popular Twitter account Moustache shows.
At 30 months, time is in fact up for that event to happen compared to both 2018 and 2014.