On-Chain Commentary
- Bullish trend dynamics continue to manifest, with some stark outperformance intra-sector as well as outperformance against tradfi
- Technical golden crosses (50/200 DMA) should occur over the next month
- Growing utility & efficiency has pushed Bitcoin’s hash rate back to highs
Bitcoin is now +37% YTD, outperforming the S&P 500 by a factor of 10x. Now with both the FTX debacle and tax loss harvesting in the rearview, sentiment has slowly begun to regain a bullish footing. The most important near term news-related event is likely to be the Genesis bankruptcy proceedings and any related asset liquidations. Price has now exceeded the high before the FTX collapse and has held above both the 200 daily moving average (DMA) and daily Ichimoku Cloud. Trend has flipped from bearish over the entirety of 2022, to neutral over the past few months, to bullish once again. Most layer 1 protocols have also followed Bitcoin, with a similar technical bullish reversal and near term outlook. Collectively, this bullish price action has not yet resulted in a rise in on-chain activity, suggesting the current rally in digital assets may be driven more by speculation than by utility.
Upcoming technical events of note include a 50/200 DMA cross and breaching above the 200 week MA (WMA), which had been the level of ultimate bear market lows in previous cycles. The trend will remain bullish until price breaches below the 200 DMA, currently at $19,600. Both the 200 WMA and nearest horizontal resistance reside at $24,700. The yearly pivot, which is mathematically based on the highs and lows of the previous year, joins the confluence of resistance at $26,700.
Bitcoin’s network hash rate continues to surge higher, as more efficient mining equipment is installed and more efficient miners obtain hardware from less efficient miners. Susquehanna nuclear power facility in Pennsylvania also recently announced a completed Bitcoin mining facility, which is being used to balance the supply and demand of energy use for the plant. During idle power demand, energy can be diverted to Bitcoin mining and shift back to normal use when demand rises. Unlike a nuclear power plant, Bitcoin mining can be turned on or off with the flip of a switch. This mining avenue alleviates shutdown or restart procedures as the excess power can still be used for a revenue-generating endeavor.
