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BITCOIN INTEREST WANES AS A VIOLENT BREAKOUT LOOMS

Chris Brookins
Former Contributor
Opinions expressed by Forbes Contributors are their own.
I write about DeFi and Web3
Jul 20, 2020,02:57pm EDT|


This article is more than 2 years old.
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Volatility Ahead Caution Sign - Blue Sky Background

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Since the halving, bitcoin’s price has traded mostly between $9,000 and $10,000,
compared to the red hot DeFi and “alt” coins that regularly post triple digit
returns. In recent weeks, bitcoin’s range has tightened with many analysts
noting a potentially violent price breakout on the horizon. However, there is no
consensus on which direction the breakout will assume.




Charles Edwards, Founder of Capriole Investments, suggests bitcoin’s
fundamentals have never looked better. “I have a very bullish outlook in the mid
to long term. For example, energy value is at all time highs, suggesting BTC is
more valuable than ever before. When this is increasing, it is historically very
bullish.” This longer term indicator may suggest that a breakout leans towards
the bulls.



Interestingly, bitcoin’s tightening volatility is not a new phenomenon, and
occurred from late-September to early-November 2018, which ultimately broke out
to the downside, falling from $6,500 to $3,400. One quantitative risk indicator
value has been dropping quickly coupled with compressing price volatility. The
only other time this dynamic unfolded was November 2018, which could suggest
that a stark price fall is on the horizon. The caveat is that this signal has
only occurred once before, thus suffers from a small sample size.



PROMOTED




https://weeklyjab.substack.com/p/weekly-jab-bitcoin-analysis-3



Additionally, the anonymous Founder of Decentrader, Filb, notes “derivatives
open interest (OI) increasing as we have consolidated through this period by
about 45%, is a similar amount seen before the fall in Q3 last year, to around
8k. It appears OI has been net increasing on dumps. This implies that...the
market needs a catalyst to clear this OI out.”


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Tradingview.com, Decentrader.com



Furthermore, Filb adds, “alts have continued their downward trajectory over the
past few days, which are probably quite important as to what happens next;
particularly if they start dumping and the money flowing back into bitcoin isn’t
doing anything. Something to pay attention to for sure.”

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Lastly, Bo Collins, CEO of San Juan Mercantile Bank and Trust, notes bitcoin CME
futures volume growth from 2019 to 2020 is only approximately +10%, at the time
of writing. This number becomes weaker when considering yearly foreign exchange
(FX) futures volume growth can regularly eclipse +30%, e.g. 2018. Tepid bitcoin
futures growth calls into question the institutional adoption narrative in some
respects, and may imply less buying demand than originally suspected.

However, as shown by Glassnode.io, the amount of bitcoin held on centralized
exchanges has dropped considerably since March, which seems bullish for bitcoin
as spot investors appear to be holding for the long-term rather than short-term
trading.



https://glassnode.com/

Furthermore, per Blockchair.com, bitcoin days destroyed supports the
aforementioned notion, with 2020 metrics well within the historical average,
including far smaller spikes than previous all-time highs, thus bullish.



https://blockchair.com/bitcoin/charts/coindays-destroyed?interval=full

Despite the differing analyses, the only thing that is certain, is that a strong
breakout for bitcoin looms. Only time will tell which faction of analysts are
proven correct.

Disclosure: The author owns bitcoin and ethereum.


Follow me on Twitter or LinkedIn. Check out my website. 
Chris Brookins



Chris is the co-founder of RociFi, a new DeFi primitive for zero and
under-collateralized lending. 



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Trump Leads Biden By 5 Points In Hypothetical 2024 Presidential Poll
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SHARE: TRUMP LEADS BIDEN BY 5 POINTS IN HYPOTHETICAL 2024 PRESIDENTIAL POLL


AN EMERSON COLLEGE POLL RELEASED FRIDAY FOUND PRESIDENT JOE BIDEN IS DOWN 44% TO
39% TO FORMER PRESIDENT DONALD TRUMP IN A HYPOTHETICAL 2024 REMATCH, AS BIDEN’S
APPROVAL RATING CONTINUES TO PLUMMET.

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