Decentral Block Post

The United States filled in the wide gap in Bitcoin (BTC) mining that was left open by China by the end of June 2021. Despite looming rumors of high power consumption, officials in Texas, one of the fastest growing crypto mining hubs in the US, now believe that mining operations can, in fact, garner a symbiotic relationship with the energy industry. 

A newsletter from the Texas Comptroller’s office revealed the state’s pro-crypto stance with the intent to host long-term miners and operators. Clarifying the general misconception about Bitcoin’s energy usage, the fiscal note highlighted that unlike “manufacturing facilities or industrial chemical plants, which can be expected to be around for decades,” cryptocurrency mining facilities do not place big electrical demands on the grid.

With greater crypto miners moving into Texas, concerns around power demand remain as the sudden surge threatens to disturb the balance between supply and demand. While other power-hungry industries often continue production amid market fluctuations, one of the concerns raised in the newsletter by Texas-based research associate Joshua Rhodes was:

“The difference is that Bitcoin mines (mining facilities) can come in so fast and may be gone so fast depending on the price of Bitcoin.”

Given the unique positioning of the crypto mining market, Texas officials believe miners can participate in demand response programs — which involve turning off miners’ power during peak demand. This process is widely adopted by energy-intensive industries such as petrochemical plants.

Bitcoin (BTC) lost a key bear market trendline last week as it shed almost 12%, but other chart data offers a silver lining for bulls.

As noted by popular Twitter user Dave the wave on Aug. 24, long-term moving averages (MAs) are about to repeat classic bullish behavior.

Analyst: Bulls could be about to "do well"

BTC/USD disappointed over the weekend as it put in lows not seen since the end of July. Since then, $21,000 has offered only weak support, and fears abound that new lows are coming.

One of the casualties of the downturn was the 200-week MA, data from Cointelegraph Markets Pro and TradingView shows, a level which had flipped from resistance to support the month prior.

Now back overhead and unchallenged by rebounds this week, the 200-week MA offers a verdict on the current lack of strength in Bitcoin.

Avalanche-based decentralized finance (DeFi) protocol Trader Joe claims it may have found a way to mitigate one of DeFi’s biggest weaknesses — impermanent loss. 

In a newly released whitepaper on Aug. 23 called the JOE v2 Liquidity Book, authored by Quant developers and researchers Adam Sturges, “TraderWaWa”, “Hanzo” and software engineer “Louis MeMyself”, the developers outlined the use of Liquidity Book (LB) with an additional variable fee swap feature to "provide traders with zero or low slippage trades."

Trader Joe said the new strategy will mitigate impermanent loss "suffered by so many liquidity providers (LPs) on other DEXs during market turbulence."

Impermanent loss, which has been seen as one of DeFi's greatest weaknesses, happens when the price of token changes after one deposits it in a liquidity pool-based automated market maker as part of yield farming — a type of investment in which one lends tokens to earn rewards (not the same as staking).

It’s also one of the reasons that institutional investors have been treading with caution in the DeFi space, according to digital-asset management firm IDEG’s chief investment officer Markus Theilen.

Bitcoin (BTC) experienced a 16.5% correction between Aug. 15 and Aug. 19 as it tested the $20,800 support. While the drop is startling, in reality a $4,050 price difference is relatively insignificant, especially when one accounts for Bitcoin's 72% annualized volatility.

Currently, the S&P 500’s volatility stands at 31%, which is significantly lower, yet the index traded down 9.1% between June 8 and June 13. So, comparatively speaking, the index of major U.S. listed companies faced a more abrupt movement adjusted for the historical risk metric.

At the start of this week, crypto investors' sentiment worsened after weaker conditions in Chinese real estate markets forced the central bank to reduce its five-year loan prime rate on Aug. 21. Moreover, a Goldman Sachs investment bank strategist stated that inflationary pressure would force the U.S. Federal Reserve to further tighten the economy, which negatively impacts the S&P 500.

Regardless of the correlation between stocks and Bitcoin, which is currently running at 80/100, investors tend to seek shelter in the U.S. dollar and inflation-protected bonds when they fear a crisis or market crash. This movement is known as a "flight to quality" and tends to add selling pressure on all risk markets, including cryptocurrencies.

Despite the bears' best efforts, Bitcoin has not been able to break below the $20,800 support. This movement explains why the $1 billion Bitcoin monthly options expiry on Aug. 26 could benefit bulls despite the recent 16.5% loss in 5 days.

Bitcoin (BTC) price remains pinned below $22,000 as the lingering impact of the Aug. 19 sell-off at $25,200 continues to be felt across the market. 

According to analysts from on-chain monitoring resource Glassnode, BTC’s tap at the $25,000 level was followed by “distribution” as profit-takers and short-term holders sold as price encountered a trendline resistance following a 23 consecutive day uptrend that saw BTC trading above it’s realized price ($21,700).

The firm also noted that the “total inflows and outflows to all exchanges” metric shows exchange flows at multi-year lows and back to “late-2020 levels,” which reflects a “general lack of speculative interest.”

From a higher-time frame perspective, Bitcoin’s current price action is simply a continuation of its near 3-month long chop in the $18,500 to $22,000 range, but the real damper on sentiment are persistent non-crypto related concerns in the United States and global economy.

On August 25 the Jackson Hole Economic Symposium begins and from this the public will learn more about the Federal Reserve’s perspective on the U.S. economy, its plans for future interest rate hikes, whether or not the inflation target remains at 2% and if the Fed thinks the U.S and global economy are in recession. Anticipation over the symposium has clearly made investors skittish and these frayed nerves are visible in the S&P 500, DJI and crypto markets this week.