An important factor in MATIC’s journey to the new ATH

The recent sell-offs triggered by Bitcoin’s flash crash have pushed most altcoins into the red. However, there are still exceptional reversals like LUNA while other altcoins like MATIC recover quickly. Establishing a new ATH has been MATIC’s goal lately, and with Bitcoin slowly recovering, the price of the Polygon token seems to be heading towards an ATH of $2.7.

So, will MATIC make a new ATH or will the price just rally to the $2.44 region as it did at the end of May?

Price action looks to favor the big performance

In the context of the whole market selling off, MATIC lost nearly 30% of its value and at one point was only $1.50 on December 4. However, the coin quickly recovered and soon surpassed $2.25. At the time of writing, MATIC is trading at $2.46, just below the $2.70 ATH and looks set to create a new ATH.

Source: TradingView

Despite gaining 28.35% on the daily chart, MATIC’s relative strength index (RSI) has yet to reach the overbought zone, providing room for further price gains. On the time MATIC rose above previous key resistance levels, the RSI increased significantly, giving an overheated signal.

Furthermore, the RSI bounced quickly after testing the overbought zone in early December. That process was almost parabolic in early May when MATIC established an ATH.

Additionally, MATIC’s circulating market cap has finally crossed the $16 billion mark at press time. Interestingly, the upside move seems to be triggered by some positive developments taking place on this layer 2 protocol.

Source: Messari

Accumulation and support from institutional investors drive the price

Buying sentiment is an effective support factor for MATIC price. Specifically, on Nov. 6, 3,000,300 MATIC (worth $5,802,630 at the time) was transferred from Binance to an unknown wallet. This shows how an accumulation trend is in favor of the price.

The number of daily active addresses also increased while the active deposits that once fell slightly recovered well and highlighted the high network activity.

Source: Sanbase

Furthermore, while short-term MVRV is unusual, long-term MVRV is not near overheating regions, which is also a good sign.

Source: Sanbase

MATIC started to rise last week after exchange-traded product (ETP) issuer 21Shares announced it would list a MATIC-linked product on the Euronext exchanges in Paris and Amsterdam. However, while the on-chain indicators look bright, the retail crowd is not yet enthusiastic about the coin.

The relatively low trading volume is also proof of that. Therefore, a push from the retail crowd will be the deciding factor in MATIC’s race to ATH. Otherwise, the chances of a break above the $2.7 mark are lower.

Regret buying gold instead of Bitcoin

With the same capital of more than 100 USD, if buying 0.03 Bitcoin since the beginning of the year, so far, the profit has been doubled compared to buying gold.

Less than a month when Bitcoin hit $60,000, the digital currency set an all-time high when it crossed the $67,000 mark.

After I shared the link to the article above, a friend made a calculation and regretted that earlier this year he used his savings to buy gold. At that time, my friend bought four gold rings for about 9500 USD. At the same time, I bought 0.03 Bitcoin as mentioned.

Calculating, if my friend put all the money to buy gold above to buy Bitcoin, at the same time, he will buy about 0.29 Bitcoin. Now, temporarily with the highest milestone that Bitcoin has reached is 67,778 USD per coin, which is almost double the profit compared to the amount spent buying gold.

We write this post not to encourage anyone to play Bitcoin. The main problem that we want to point out is that, nowadays, the digital currency investment channel, represented by Bitcoin, is much more attractive than other traditional channels such as real estate and gold.

To buy a real estate, a large amount of capital is required. If you do not have a thick capital, of course you have to borrow and pay the principal and interest for many years. During this Covid-19 situation, real estate is still not bright and liquidity is not high.

As for gold, we think it’s just something to anchor the value of labor, to avoid devaluation compared to holding cash. Gold is not an attractive investment channel today when its value increases too slowly. Right now, the price of gold rings of each type 1 that my friend bought has a buying price of 51.85 million dong a tael. Obviously, if you sell, my friend is at a loss, not a profit.

Energy Consumption Soars As Bitcoin Peaks

The Bitcoin network’s energy consumption spiked as the cryptocurrency’s price surpassed $66,000, as world leaders sought to tackle climate change.

The price of the world’s largest cryptocurrency reached $ 66,700 at the end of October, breaking the record set in mid-April of this year. Bitcoin’s rally also helped Ether, the second largest cryptocurrency, rise to more than $4,054 a coin.

This also leads to many people racing to mine cryptocurrencies, which increases the energy consumption of the entire network. Bitcoin’s hashrate is accelerating and is likely to hit a new high, along with record energy consumption, according to data from the UK’s University of Cambridge.

The Bitcoin system uses as much electricity as the whole of the Netherlands, an uncomfortable reality as world leaders attend the COP26 climate change summit in Glasgow, Scotland.

Bitcoin Mining

Bitcoin and Ethereum are operating under a proof-of-work (PoW) method, in which miners use computers to solve complex math problems to validate transactions and receive new coins as a reward. This method requires a highly configurable computer system or specialized equipment, which consumes power.

The higher the Bitcoin price, the more attractive the mining activity. Bitcoin miners’ revenue in October soared to $1.72 billion, close to the $1.75 billion peak hit in March.

“Hashrate and energy consumption will soon reach new peaks at current Bitcoin prices, as more and more people join mining,” said Alex de Vries, founder of Bitcoin energy data service company Digiconomist.

In addition to using huge amounts of electricity, cryptocurrency mining also creates a lot of electronic waste, as miners constantly replace old machines with new, more efficient products. Digiconomist’s report shows that one Bitcoin transaction can generate as much waste as throwing away two iPhones.

Hot controversy

An increase in energy consumption does not mean an increase in carbon emissions, especially as many large businesses in the Bitcoin mining industry are looking to transition to renewable energy sources and form the Bitcoin Mining Council (BMC). ) to promote greener cryptocurrency mining.

Coins that simulate Bitcoin. Photo: Reuters

Cambridge University 2020 data estimates that around 40% of Bitcoin mining uses green energy. BMC said last month that the rate has now increased to 58%, making Bitcoin mining one of the greenest industries in the world, despite many critics still arguing that the energy poured into cryptocurrency mining can used elsewhere.

The crackdown on crypto mining in China in the middle of the year also pushed Bitcoin to become greener. Much of the mining in the country relies on coal-fired power, but the government’s ban forces many miners to move to the US, where renewable energy is the cheapest source of electricity.

Environmental efforts in the financial industry also make a difference, as low-energy platforms attract investments from big names.

Ethereum is gearing up for an ambitious upgrade, Ethereum 2.0, in which the network will transition to a proof-of-stake (PoS) method that relies on people already holding cryptocurrency to process new transactions. This method does not require a power-consuming computer system, which is more environmentally friendly than current PoW.

Bitcoin successfully activated Taproot

The Bitcoin network has just successfully activated Taproot, one of the most important updates since 2017. The final update Segregated Witness (SegWit) was integrated for the first time to solve Bitcoin’s scaling problem. .

Taproot is a soft fork for the Bitcoin network, aimed at improving scripting and privacy. To do this, the soft fork introduces the concept of Merkelized Abstract Syntax Tree (MAST).

Sjöberg pointed out that enabling Taproot shows that Bitcoin can perform network upgrades again, which is extremely important for the longevity of the Bitcoin network.

The update will also add Schnorr signatures, essentially making multi-signature transactions unreadable, according to Bitcoin miner Alejandro De La Torre. This activation is based on 90% consensus from miners and mining pools between blocks 709,488 and 709,632.

Importance?

As a matter of optimization, Key and Signature Aggregation will now allow the aggregation of public keys and signatures. For example, if an exchange sends 100 transactions to 100 people, they can now compress all 100 public keys into one and all 100 signatures into one.

The upgrade was confirmed when 90% of Bitcoin operating nodes reached consensus on June 12. Even so, the rollout of the upgrade didn’t happen until today. The month-long delay is designed to allow enough time for inspection and testing. This will reduce the possibility of problems during the upgrade.

The Bitcoin network has undergone numerous community-driven hard forks and soft forks. However, the current update won’t magically improve the network’s capabilities and privacy in the short term. It will take some time.

Jimmy Song, a programmer and Bitcoin technical expert, addressed this in an interview with Natalie Brunell.

Expect BTC price to set a new record

At the last major upgrade of 2017, Bitcoin was valued at $4,000 and after that, it continued to rise to a record of nearly $20,000 in just four months. Currently, BTC has gained about 2% in price in 24 hours and is trading at $64.771, presumably thanks in part to the aforementioned upgrade. Hopefully history will rhyme and Bitcoin can set new records in the near term.

Here’s How to Check if Bitcoin is Falling in Price

Over the past few months, Bitcoin investors have been in a state of euphoria as the crypto king rallied and hit new highs. However, there are times when there is a sharp drop.

Bitcoin – Rising high, plummeting?

In terms of price movement, the probability of a major drop seems to be quite low. However, at the time of writing, some on-chain indicators are repeating the signals of May 2021 while others are reaching their thresholds.

For example, the illiquid supply shock rate that recovered from a bearish divergence of just over a month broke 2019’s uptrend. This was followed by a drop in May that saw Bitcoin drop 53% in 3 months.

Currently, this indicator is in the bullish zone. Once the market registers another bearish divergence, it will be a signal for you to become cautious again.

Bitcoin’s illiquid supply shock rate | Source: Glassnode

Then there is the on-chain cost base ratio, which compares the actual price of the short- and long-term holders. Accordingly, the market is not too hot yet.

However, that does not mean that investors should feel comfortable as in 2013, it took less than 3 months for this indicator to break the red warning line.

Bitcoin On-chain Cost Base | Source: Glassnode

Finally, despite the price hitting a new all-time high this month, Bitcoin’s social dominance has dropped to a May low. When these levels were last reached a few months ago, Incident in May 2021 has shaken the market. So if it continues, BTC could be in trouble.

Bitcoin Social Dominance Rate | Source: Santiment

However, the good news is that since NUPL is still far away from the 0.75 mark, investors can be assured of the possibility of an immediate drop in price because in the past, the price has never dropped until it reaches that line. .

NUPL Bitcoin | Source: Ali Charts

The important thing here is that with the long term hodler starting to sell, the market can reverse if the trend continues for too long, especially as long term selling has never been in the market’s favor.

Therefore, investors should exercise caution if either of the above two reminders is triggered. At that time, most likely the price will drop.

Bitcoin price prediction using the Stock-To-Flow model

There are many predictions about the future price of Bitcoin. In fact, no one knows whether the price of Bitcoin will go up or down tomorrow, even the longtime experts in the market.

However, there is a model that allows to predict the Bitcoin price in the long term quite accurately, in accordance with what has happened in traditional markets such as gold or silver. That is the Stock-to-Flow model and it works based on Bitcoin’s total supply of 21 million coins, and its inflation-mitigation mechanism.

What is the Stock To Flow Pattern?

Stock To Flow (S/F) has 2 important concepts: Stock and Flow. Where Stock is the reserve and Flow is the flow. These are two extremely important concepts in the field of System Dynamics. The field of application is often macroscopic and has high complexity and volatility.

Formula to calculate Stock To Flow

In the case of Bitcoin, Stock is the amount of Bitcoins that have been created and are in circulation, and Flow is the number of Bitcoins born in a period of time. And S/F is calculated by the formula as below:

S/F = Stock / Flow

Usually the inflation rate is calculated using the Flow/Stock formula (ratio of the amount that increases to the amount available). Meanwhile S/F expresses a new element: Scarcity.

Below is information on some S/Fs of commonly seen assets:

Gold has an S/F = 62, which means that it takes 62 years of mining to create the same amount of gold that is in circulation. Silver has an S/F of 22. From this we see that this high S/F ratio makes gold and silver a commodity with the characteristics of money.

However, Palladium or platinum has an S/F of approximately 1. This means that the total amount of goods in circulation is equal to or less than the total annual new supply. Suppose that if someone hoards it in large quantities in a short period of time, the price of this commodity will skyrocket, but this price spike stimulates an increase in the productivity of its production which leads to an increase in the price of the commodity. new output enters the market, and eventually prices fall again when supply and demand become in balance. This is almost impossible to change.

In the case of Bitcoin, you can calculate S/F by taking the total circulating Bitcoin of 18.2 million and dividing it by this year’s supply of about 0.7 million so S/F = 26. This S/F ratio helps Bitcoin rank into commodity groups like gold and silver. That is not counting the case in the next 4 years, from May 2020, the Bitcoin supply is halved, meaning the production supply is 0.35 million, the S/F number will be even higher.

This halving event is known as the Bitcoin Halving and is very important in terms of Bitcoin’s inflation and S/F ratio. The diagram below shows Bitcoin’s inflation over time, the folding of the graph caused by the aforementioned halving event.

Stock-to-Flow and the Value of Bitcoin

The basic hypothesis of this study is the effect of a commodity’s scarcity (measured in S/F) on its price. This is evoked after referring to the scarcity table above with the total market value of the respective precious metal.

Research data

S/F is calculated for the period from December 2009 to January 2019 (a total of 111 data points). The number of new monthly blocks is queried directly from the blockchain. With the number of blocks generated monthly and the number of new Bitcoins created per block at that time, we can calculate the flow and stock, ie the S/F. In addition, since there is about 1 million BTC lost, i.e. no longer in circulation, it will be excluded from the calculation by omitting the first 1 million BTC in the calculation process.

The price of Bitcoin is referenced from many different sources but all started as early as July 2010. Before July 2010, there were 2 events about the first price of Bitcoin (1309 BTC priced at 1 USD in October 2009, the first quote of 0.003 USD/BTC on BitcoinMarket in March 2010 and finally the Bitcoin event. Pizza with 10k BTC for a $41 pizza) is also added for interpolation data.

Besides, the S/F data of gold and silver will also be included as a standard. (Gold: S/F=62, total value of $8.5 trillion. Silver: S/F=22, total value of $208 billion)

Data modeling

With a market value of $10,000 to $100 billion, it’s clear that using logarithms to scale down the graph makes it easier to see.

In the graph above, we see that the positions of the arranged points match the linear regression line (black diagonal). This shows a strong association between S/F and total capitalization.

Bitcoin made a new all-time high at $49,400

Bitcoin just soared to a new all-time high of $ 49,400 despite a consolidated ETH price. The leading cryptocurrency has established this new high after much of the past week trading in the $ 47,000 range.

Bitcoin is going higher thanks to the continued influx of institutional capital.

Tesla revealed on Monday that it holds a substantial amount of BTC to protect cash positions and provide liquidity for the intent to accept payments in BTC.

Institutional investor support drives further demand for Bitcoin
Raoul Pal, the CEO of Real Vision and former hedge fund sales manager at Goldman Sachs in Europe, stated that the participation of organizations like Tesla will create a feedback loop driving demand for Bitcoin:

“Remember that as BTC’s market cap increases, it forces more institutions to join. The more accepting institutions there are, the more others have to do so, and the harder it is for regulators to stop it. A perfect reflexes run it all.

For example, the news of Tesla buying Bitcoin to diversify its cash portfolio has sparked discussions about cryptocurrencies with other corporations across the United States. For example, Twitter’s chief financial officer said that they are looking at Bitcoin and even paying salaries with cryptocurrencies in a recent CNBC interview.

Bitcoin’s technical indicators may also indicate that there is room to move higher.

“PlanB”, an analyst focusing on BTC, notes the relative strength index is on a similar path as the one in the previous cycle. If history does repeat, Bitcoin still has the ability to scale up its rally before experiencing a correction.

Disclaimer: This article is for informational purposes only, not investment advice. Investors should learn carefully before making a decision. We are not responsible for your investment decisions.