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May halving and summertime sadness

By Marius-Cristian Frunza
Weekly Briefs

The May halving brings much hope to the cryptocurrencies’ community as many think Bitcoin’s  price skyrockets. The upcoming halving reduces the mining retribution, new Bitcoins are scarcer, and in theory, shrinkage in supply leads to a higher price.  

This is far from being righteous because Bitcoin is not Keynesian and the halving implies mostly that the cost of mining may double overnight. The general mining breakeven price is currently between 6,500-7,000 USD and may reach 13,000 USD in the summer. With a price that struggles below the 10,000 USD resistance level, the main question is who would mine for Bitcoin in June? Most miners using old technology may cease the operations and the mining farms based in China will have even more market share.  Yet, Bitcoin needs to reach at least 14,000 USD to be attractive for miners. Otherwise, we risk having a shutdown…

Will May bring the summertime sadness? Will Bitcoin kiss you hard before it goes down? Maybe, but at least you can start to book your holiday flight tickets with Norwegian Air using Bitcoin.

Market overview

Bitcoin retreated last week below the 10,000 USD after a significant dip of over 500 USD. Seemingly there are few big whales in the market that preferred to cash in the unrealized profit accumulated since December. The transacted volume was lower than in the previous weeks, underling that the market participants are expecting new signals before taking any chances. The relative strength index shows that there is still place for a comeback in the following days.

Meanwhile in the crypto-world

Fidelity Investment

Fidelity Investment is interested in crypto-currencies exchanges. The US-based broker, through its subsidiary Fidelity International, took 5.6% stake in OSL, a Hong Kong-based crypto exchange. If Fidelity proposes to its client an opportunity to invest in crypto-currencies, then it can be a game-changer for the entire sector.

Oklahoma City

Oklahoma City seems to have cheap electricity: at least for the NASDAQ listed company Riot Blockchain. Riot invests heavily in mining gear and develops the operation in Oklahoma.

Norwegian Air

Norwegian Air allows customers to buy tickets with cryptocurrency on the Norwegian Block Exchange(NBX). Last year Sparebanken, one of Norway’s oldest banks, took a substantial stake in NBX.

Mt. Gox

Mt. Gox’s saga could easily be a scenario for one of Takeshi Kitano’s movies. The creditors of the Japanese Bitcoin exchange that became bankrupt in 2014 received an offer they cannot refuse from the New York-based private equity firm Fortress. The investors proposed to buy the remaining Bitcoins at a heavily discounted price. The creditors probably regret now not keeping the money under their mattresses.

Crypto of the week

Tezos

Tezos is one of the altcoins that had a good week despite the global market contraction. Tezos continues its expansion since the beginning of the year, increase its value by 95%. Tezos is one of the Altcoins that does not operate through a proof of work but through a proof of stake. Its founders claim that their blockchain has been facilitating the development of new security tokens and tokenization of projects lately. Investors should be cautious about this rally because the current inflow of liquidity is a fertile ground for “pump and dump”.

Market outlook

The Bitcoin will test again the 10,000 USD resistance level with chances to find more support than in previous week. Ether and the other Altcoins may see a smaller rebound. The upcoming halving forces the main crypto into positive territory, so the positive trend should continue in the mid-run. Nevertheless, if the trend is not strong enough or is undermined by few big whales we may see a big crash in April.

General Disclaimer

The information and data published in this research were prepared by the market research department of Darqube Ltd. Publications and reports of our research department are provided for information purposes only. Market data and figures are indicative and Darqube Ltd does not trade any financial in- strument or offer investment recommendations and decision of any type. The information and analysis contained in this report has been prepared from sources that our research department believes to be objective, transparent and robust.

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