Bitcoin BTC price has reached “a general accumulation phase”: analyst

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Good morning. Here is what happens:

Price: Bitcoin stayed below $27,000, but an analyst says the biggest crypto by market value is in an “accumulation phase.”

Insights: BRC-20 tokens reach a market capitalization of $500 million, and data from Glassnode shows that they continue to be a lucrative source of fees for miners.

Bitcoin reaches an “accumulation phase”

Crypto prices remained lethargic as Asian markets opened on Friday.

Bitcoin was recently trading at around $26,835, roughly flat over the previous four hours, but down 1.2% from the same time on Wednesday, according to CoinDesk Indexes. The biggest cryptocurrency appeared almost entirely untouched by Wednesday’s late night vote in the US House to pass a debt ceiling increase that would allow the government to pay its bills, at least in the short term. . The Senate will likely vote on the bill late Thursday evening (ET).

But in an email to CoinDesk, Bob Baxley, the CTO of DeFi infrastructure platform Maverick Protocol, wrote that crypto markets may now have to reckon with a US Treasury having to replenish its general account, which has decreased in recent months. This could undermine the liquidity otherwise available for investments in digital assets.

The risk here is that the roughly trillion dollars returning to the general account could suck a huge amount of market liquidity,” Baxley wrote. “Something like this happened in 2019, and the pressure on the market basically forced the Federal Reserve to step in and add emergency liquidity to avert a widespread crisis. So, in short, just because a deal was done doesn’t mean we’re off the hook yet.”

Ether, the second-largest crypto by market value, was recently trading at around $1860, up 0.6% in the past 24 hours. ETH spent part of Thursday in the green on a day when most assets faltered in negative territory. GRT, indexing protocol token The Graph, and popular memecoin SHIB fell more than 7% and 4%, respectively. But Litecoin continued its recent gains by rising more than 3%. LTC is up 7.5% in the past 30 days as investors eye its halving in two months and increasing trading activity.

At its opening hour on Friday, the Nikkei index was up around 0.6%. US stocks closed largely higher, despite lingering concerns about inflation and the potential for more hawkish interest rate hikes this year.

Maverick’s Baxley wrote optimistically that crypto investors appear to be “in a general accumulation phase.”

“Moving averages are pointing to a neutral level or perhaps a bit more bullish, suggesting that we are building another foundation for another leg up,” he wrote, noting that the Markets had already priced in potential rate hikes from the US central bank, which in the past have rattled prices.

He added: “What matters most these days is liquidity. Most investors are currently taking a rather cautious approach as a result, I guess.

BRC-20 tokens are pushing towards a market capitalization of $500 million, and new data from Glassnode shows that they continue to be a lucrative source of fees for miners.

According to on-chain data, registrations now account for 25% of all transaction fees and around 40% of all transactions on the Bitcoin blockchain.

While the listings remain controversial within the broader bitcoin community, for miners they have been a boon.

A miner’s income consists of two components: block rewards, currently 6.25 BTC ($167,709), and transaction fees which fluctuate based on network demand, with fees traditionally lower than rewards since 2017. .

Data from CryptoQuant shows that the fee-to-reward ratio for bitcoin miners has shifted in favor of miners thanks to signups and ordinals.

The fee-to-reward ratio is up to 7.22% from an average of around 2-3% earlier this year.

As an example of how this helps miners, over the past three months bitcoin is up 16% while Valkeryies mining ETF, WGMI, is up 42%.

However, this might not last forever, as the unexpected surge in miner revenue may be short-lived due to high transaction fees pushing users towards alternatives like the Lightning Network and stablecoins.

Bitcoin (BTC) and the broad cryptocurrency market sold off for the second straight day on Thursday as fears over inflation and continued rate hikes resurfaced. Todd Groth, CFA, Head of Index Research CoinDesk Indices, shared his analysis of the crypto markets. Additionally, InvestHK’s head of financial services and fintech, King Leung, discussed the state of crypto in Hong Kong as the country’s securities regulator begins accepting applications for platform licenses. crypto trading. And Nestcoin co-founder Yele Bademosi shared his reaction to the adoption and innovation of crypto in Nigeria.

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