BT Daily News: Bitcoin volatility on the horizon, where is BTC headed?

1. Bitcoin volatility on the horizon, where is BTC headed?

Bitcoin market volatility has been extremely low recently. However, such periods of inactivity are usually followed by a big move, but which way will it be?

On May 22, on-chain analysis platform Glassnode reported that volatility had been very low in recent weeks.

It stated that the seven-day price range of Bitcoin was just 3.4%. Furthermore, this has consolidated within one of the tightest ranges over the last three years.

Big Bitcoin Move Approaches 
The squeeze in price range is comparable with that in January, it added. There was also a similar low range in July 2020, “both of which preceded large market moves.”

This suggests high volatility is likely on the horizon.”

Bitcoin prices oscillated around $17,000 in December and January for weeks before surging above $23,000 over the span of around two weeks. A similar upswing occurred in July 2020 when, after weeks of hovering just above $9,000, BTC cranked to $12,000.

Furthermore, markets were in choppy bear territory on both occasions, which is where they are at the moment. BTC remains down 61% from its November 2021 all-time high and may fall further in the next big market move.

On May 21, trader and analyst “Rekt Capital” commented that a weekly close below $27,600 “would double-confirm a breakdown and could set BTC up for downside continuation.”

The weekly candle closed around $26,800, so the analyst could be onto something. “Price needs to reclaim $27,600 to have a chance at bullish momentum,” he added.

Furthermore, Bitcoin miner outflows have also indicated that selling pressure will increase.

BTC Price Outlook
Bitcoin has retreated 1.3% on the day to trade at $26,758 at the time of writing. The asset dropped to an intraday low of $26,543 in the early hours of May 22 but appears to be bouncing back.

BTC has been in a choppy sideways channel for the past ten days as volatility diminishes. On the low side, support can be found at around $24,400 should a big move occur. This has also been an area that on-chain analysts have eyed.

It represents a cost basis of young coin supply and a psychological level to monitor, wrote Glassnode earlier this month. It also marks February’s highs which could be revisited should the correction continue.

2. Memecoin mania and NFTs bring a ‘seismic shift’ for Bitcoin mining

AN eruption of memecoins and non-fungible tokens (NFTs) on the Bitcoin blockchain has reshaped the revenue profile of miners and stirred questions about how lasting the upheaval will prove to be.

New software known as Ordinals paved the way for the NFTs and meme tokens to come to the network this year. Galaxy Digital Holdings says the Bitcoin NFT ecosystem could be worth US$4.5 billion by 2025, while about 25,000 memecoins have been tallied on the blockchain since they first emerged in March.

The NFT and meme-token craze spurred record transactions and an ensuing fee windfall for miners, who run the computers underpinning Bitcoin. At one point in May, transaction fees made up over 40 per cent of revenues, whereas miner income is usually dominated by the new Bitcoin they get for securing the blockchain.

The Ordinals protocol has stimulated a seismic shift in the Bitcoin mining landscape,” said Jihan Wu, chairman of Singapore-based Bitdeer Technologies Group, one of the top crypto miners by computer power.

Ordinals and a crypto rebound have eased the pressure on mining margins caused by last year’s digital-asset rout and high energy costs. But Bitcoin purists argue the Ordinals phenomenon clogs the network and interferes with the largest cryptocurrency’s store-of-value and payments functions.

The mean fee per transaction on the Bitcoin blockchain began April at US$2.80, reached US$30 on May 8 and moderated to US$6 on May 18, CryptoQuant data show. Total fee income attributable to Ordinals stands at about US$37.4 million, according to data compiled by Dune Analytics AS.

A recent report reveals that Druk Holding & Investments (DHI), the business division of Bhutan’s Royal Government, is exploring crypto initiatives to enhance its portfolio expansion. DHI recently teamed up with Singapore-based crypto company Bitdeer to “jointly develop green digital asset mining operations in the Kingdom of Bhutan.”

3. Bhutan’s DHI Executive Says the Kingdom Is ‘Focusing on the New Generation of Industries’

On May 20, 2023, the Financial Times (FT) disclosed that DHI is highly interested in crypto asset ventures and enterprises. The FT journalist elaborates that DHI has been experimenting with investments connected to bitcoin (BTC) mining and drone technology. The article cites DHI’s CEO, Ujjwal Deep Dahal, who informed FT that Bhutan is “focusing on the new generation of industries.”

The article also highlights the current collaboration between the publicly-traded bitcoin mining company Bitdeer, announced in early May. DHI’s CEO remarked that “partnering with Bitdeer to launch a carbon-free digital asset mining datacenter represents an investment in a more connected and sustainable domestic economy, helping ensure we are at the forefront of global innovation.” At the time, Bitdeer’s chairman and former Bitmain CEO, Jihan Wu, stated:

We are thrilled to join forces with DHI in harnessing Bhutan’s zero-emission energy to sustainably empower blockchain technologies, which will ultimately serve as an unchangeable foundation for a worldwide store of value.

In essence, Bitdeer and DHI aim to introduce a closed-end fund with an estimated value of up to $500 million. The announcement specified that the fund’s fundraising objectives will commence by late May. Both parties intend to establish a 100-megawatt (MW) bitcoin mining facility in Bhutan. “The partnership will enable Bitdeer to tap into Asia’s abundant resources, contributing to the flourishing regional ecosystem,” according to the announcement.

As per the FT report, Hashrate Index executive Jaran Mellerud informed the publication that Bhutan could potentially become “the biggest bitcoin miner per capita in the world.” Moreover, while the 2022 crypto winter was brutal for bitcoin miners, Dahal opined that the mining sector was less hazardous. “We’re sticking largely to the mining sector which seems to be the least risky vertical,” DHI’s CEO revealed.

In 2021, DHI managed $3 billion in assets as it held and oversaw the government’s commercial businesses. These investments encompass international real estate, global equities, and startup ventures. The firm believes that bitcoin mining operations and other technologies exemplify DHI’s “future-facing investment strategy.” In mid-April 2023, an intriguing revelation surfaced regarding the Himalayan kingdom’s discreet involvement in cryptocurrency investments through Celsius and Blockfi.

Forbes uncovered that DHI’s name was mentioned in the bankruptcy filings of both companies, yet the CEO of DHI refrained from commenting on the matter during that period. Dahal, the CEO, responded, “We do not have any comments as the matter with Blockfi has been settled. We are not able to comment due to confidentiality.”