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Largest difficulty drop since July 2021 — 5 things to know in Bitcoin this week

Bitcoin is getting a dose of reality this week as the World Economic Forum convenes and analysts still favor a fresh BTC price drop.

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Bitcoin is getting a dose of reality this week as the World Economic Forum convenes and analysts still favor a fresh BTC price drop.

Bitcoin (BTC) is off to a better start than most this week as bulls avoid serious losses into the weekly close.

Still heavily tied to declining stock markets, the largest cryptocurrency is nonetheless defending $30,000 on May 23 and eyeing the top of its post-LUNA trading range.

While there are no signs of an impending miracle price recovery, some are hoping that upside will feature before any form of reversion to a downtrend.

Macro conditions remain tenuous — and the week of the World Economic Forum’s (WEF) Annual Meeting is due to add fuel to the fire surrounding tolerance of Bitcoin.

Add to that the largest downward difficulty adjustment since last July and it becomes clearer that Bitcoin is battling for strength on multiple fronts.

What could happen in the coming days? Cointelegraph presents several factors to keep in mind when it comes to BTC price action.

BTC price "nuke" still on the table

In a refreshing contrast to recent weeks, Bitcoin managed to show strength following the weekly close into May 23.

Despite still sealing a record eighth weekly red candle in a row, the lack of breakdown allowed BTC/USD to instead retain $30,000.

For Cointelegraph contributor Michaël van de Poppe, the trend was already in evidence ove the weekend.

Given the overall picture with stocks correlation and monetary tightening forcing them down, not everyone was confident in upside continuation on Bitcoin.

“My preferred Bitcoin scenario is a nuke straight to $22k before big bounce close to $40k,” popular Twitter trader Nebraskan Gooner told followers on the day.

“This would provide the best opportunity for bear market bounce and catch a lot of people off guard. Good to monitor all scenarios especially with everyone being so confident of a bounce.”

That perspective chimes with existing demands for Bitcoin to beat its previous bottom of $23,800 set on the back of the Terra LUNA meltdown.

Late last week, Filbfilb, co-founder of trading suite Decentrader and long-time market commentator, said that it was time to accept that the largest cryptocurrency was in a bear market.

“Should we lose the current support at $28,670 then the final support before new lows sits at $26,512,” he added at the time, identifying support and resistance levels which have yet to see a retest.

“To the upside, should price break through the daily resistance then the lower boundary of the Log Growth channel is at $34,270.”

In the meantime, regardless of the strength of $30,000 this week, there should be relief before any potential series reversal, popular Twitter account IncomeSharks argued.

At the time of writing, BTC/USD circled $30,500, data from Cointelegraph Markets Pro and TradingView showed.

Showdown as WEF plans to “change” Bitcoin

The first in-person Annual Meeting of the World Economic Forum since the start of the Coronavirus pandemic is the macro trigger of the week.

As the economic elite gathers in Davos, Switzerland, from May 22 through May 26, markets are gearing up for potential volatility on the back of their forthcoming remarks.

Related: WEF 2022, May 23: Latest updates from the Cointelegraph Davos team

For Bitcoiners, the event tends to be a stressful one as the industry attempts to gauge sentiment among traditional finance heavyweights.

This year is likely no different — just one month ago, the WEF released a video arguing that Bitcoin should change its Proof-of-Work algorithm to Proof-of-Stake for environmental purposes.

An accompanying campaign, “Change the Code,” from Ripple co-founder and Executive Chairman Chris Larsen and Greenpeace USA, is attempting to gain mainstream support for the swap.

The implosion of stablecoin TerraUSD (UST) this month further dragged crypto into the crosshairs of the financial establishment. Christine Lagarde, President of the European Central Bank, claimed that all cryptocurrencies are “worth nothing” and therefore — perhaps paradoxically — require regulation.

“It is based on nothing, there is no underlying assets to act as an anchor of safety,” she told Dutch television show College Tour in an interview released May 22.

Both the WEF and Lagarde have come under fire from Bitcoin sources, with even firms such as Swiss native Bitcoin Suisse showing little public tolerance for their criticism.

Just like El Salvador President Nayib Bukele’s Bitcoin-focused summit attended by 44 countries last week, meanwhile, this week’s Davos event will see a conspicuous competitor champion Bitcoin over fiat currency.

The Oslo Freedom Forum, to be held from May 23 through May 25 in Oslo, Norway, describes itself as “a global gathering of activists united in standing up to tyranny.”

Speaking at the event are a host of Bitcoin’s best-known names, including economist Lyn Alden, Strike CEO, Jack Mallers and Elizabeth Stark, co-founder and CEO of Lightning Labs.

“Two international forums starting tomorrow are on the surface similar, but diametrically opposed. The World Economic Forum and the Oslo Freedom Forum. A necessity of manipulated money is coercion, and the loss of individual rights and freedoms. See you in Oslo,” entrepreneur Jeff Booth, also due to attend, tweeted over the weekend.

Difficulty reflects conditions catching up with miners

Major Bitcoin price drawdowns are not without their consequences.

According to the latest estimates, Bitcoin’s network fundamentals are now due to adjust for the trip to $30,000.

Difficulty, which reflects changing dynamics among miners, will reduce by around 3.3% at its next automated readjustment this week. While modest compared to some adjustments, the change will nonetheless be the largest downward shift since July 2021.

The reason is simple — Bitcoin price action has not only headed south, but is challenging miners’ profitability.

Miner production cost is key in determining their ongoing activity, and a decline below the number, currently at around $26,000, would cause larger shifts in network fundamentals in order to maintain profitable participation.

According to monitoring resource MacroMicro, as of May 21, it cost an average of $26,250 to mine one bitcoin.

Despite possible profitability pressure based on estimated data, miners are not showing signs of capitulation, still keeping BTC sales to a minimum, according to the latest figures from on-chain analytics platform Glassnode.

Miner outflows — coins leaving miner wallets — hit a one-month low on May 23.

Bitcoin’s mining hash rate, meanwhile, has come off its all-time highs to circle an estimated 233 exahashes per second (EH/s) as of May 23.

For Ki Young Ju, CEO of fellow analytics platform CryptoQuant, the overall trend remains similarly clear.

“While BTC price drops -56% since Nov 2021, hashrate increased +75%,” he noted.

“The market is cold, but the fundamentals are full of heat from mining rigs.”
Bitcoin miner outlow volume 7-day moving average chart. Source: Glassnode/ Twitter

On-chain volume hits multi-month lows

Bitcoin has been famously boring for the mainstream consumer base throughout 2022 thanks to price action, but now, even participation from existing investors is waning.

On-chain data shows that volumes have been in steady decline, with the notable exception of the post-LUNA panic.

Glassnode, which tracks seven-day moving average on-chain transaction volumes, recorded nine-month lows on May 23.

From May 9 onwards, the moving average began falling precipitously, and by May 22 had fallen 70%.

While CryptoQuant’s Ki underscored the lack of interest among retail buyers, fellow analyst Willy Woo argued that it was the big players that really held sway over market fluctuations.

“Very little of the volume and therefore impact on price comes from retail needing to buy groceries,” he wrote as part of a response during a Twitter debate last week.

“5% of the supply is owned by people who hold less than $30k of BTC, the bulk of volume is larger investors who sell to hedge market risk.”
Bitcoin total transfer volume 7-day moving average chart. Source: Glassnode

Market sentiment back at rock bottom

In contrast to some modest price strength, Bitcoin is anything but bullish if looked at from the point of view of sentiment.

Related: Top 5 cryptocurrencies to watch this week: BTC, BNB, XMR, ETC, MANA

According to classic sentiment gauge, the Crypto Fear & Greed Index, the majority of the market is bracing for fresh downside.

At 10/100, the Index is back in the lower segment of its “extreme fear” zone which has historically appeared at price bottoms.

Fear & Greed is no stranger to bottom signals this year, having managed to drop to just 8/100 — the lowest since March 2020 — earlier this month.

Analyzing sentiment regarding the highly-correlated S&P 500, trader, entrepreneur and investor Bob Loukas shed some light on what could be a copycat pattern for Bitcoin.

Last week, meanwhile, popular trader and analyst Rekt Capital argued that a more substantial price change would be necessary to change sentiment in a way that matters.

“It's easy to become bullish on BTC on a green day & bearish on a red day. But BTC is still just ranging between $28K-$32K,” he tweeted.

“This will continue until either of these levels is broken. Intra-range moves aren't substantial enough to dictate changes in sentiment.”
Crypto Fear & Greed Index vs. BTC/USD chart (screenshot). Source: LookIntoBitcoin

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

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Economics

An Investor’s Look Back for 2022

As we approach the end of June, now is a good time to look back over the market to see what has been happening. The price action is in the bottom right…

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As we approach the end of June, now is a good time to look back over the market to see what has been happening.

The price action is in the bottom right corner of the charts, whereas, at the end of 2021, it was in the top right corner of the charts. Who could have seen the problems coming? I think the technical analysis arena did an excellent job of showing the risks for downside momentum to increase.

On December 17th, I recorded a video about the technical problems aligning in the market and how they created the situation for a rough start to 2022.

A historical look back

In six-month increments, let's take an educational look back on what has been happening.

June 2021

Starting in June 2021, we came off the effervescent high of the SPAC boom. As the book Reminiscences of A Stock Operator highlights so clearly, when there is an abundance of money trying to enter the market, the bankers will respond with new offerings. Nowadays, venture capitalists have all the data they need to be ready to hand over these companies at lofty valuations and step aside for the downside slide. By June 2021, the SPAC announcements had slowed to a relative crawl compared to the 4th quarter of 2020 and the first quarter of 2021.

The defensive side of the market was out of favour, still showing positive returns to their investors, but vastly underperforming. Energy raged forward as the vaccines were rolling out, suggesting the economy would surge with post-pandemic freedom. More on that later. Real Estate and financials were on fire. Interestingly, the growth areas of discretionary, communications and technology were middle of the pack.

December 2021

As the second half of 2021 rolled in, the market changed significantly. Communications and industrials vastly underperformed everything. Technology was back to a glory story, while discretionary and real estate continued to flourish. Financials were in the bottom third. Materials, energy and defensive names were middle of the pack.

By late December, we were also narrowing our focus on the Sexy Six large cap names that kept holding up, even while there was a large breakdown in many of the trendy areas of the market. We didn't know it at the time, but the November high in the Nasdaq was behind us. The move to electric cars and the investment theme around them came and went. Copper made a high in May 2021 and most of the metals moved sideways for the remainder of the year. Oil continued its steady climb in a big bull market that kicked off with the vaccine announcements fourteen months prior.

June 2022

As we turned the corner into 2022, almost all of the upward momentum was focused in energy. Technology stocks, including semiconductors and software, moved down meaningfully as the sexy six slowly let go. Alphabet, Meta and Amazon were the early leaders to the downside. Consumer discretionary and communications dropped hard.

By the end of June, the continuous slow demise of investors' love for the technology space came to the fore. By March, investors were touting the start of a new bull market in Energy. After a 1000% gain in the oil and coal stocks, the relative strength community reluctantly decided it was a new bull market in fossil fuel energy. (You can't make that stuff up!) Still, the technology investment community has been reluctant to dive into the dark side. While the tiger cubs watched 50% of their asset valuations disappear, they couldn't muster a shift into the best performing sector for the past 18 months.

To end the quarter, the financials wobbled sideways but slowly moved lower. On Friday, June 17th, the bank ETF closed at new 52-week lows. Commodity stock markets like Australia and Canada dropped meaningfully as oil names sold off hard. Oil stocks quickly plummeted for 10 days from new highs to their 200-day moving averages, casting down 25%. The technology names continue to be sold as inflation roars. The Fed is speeding up their time line for rate hikes as the economy slows quickly under the pressure of firm gasoline prices and rising food prices.

What's next?

The graph below shows the stock market price/earnings ratio (P/E) ticking down over the past 6 months. The move down is a 20% drop from all-time highs. Because this is a 100-year chart, the log scale makes the move down look small. An arithmetic chart would show this as a 20% plunge of the entire chart height. With the Fed continuously providing a trampoline for the markets from 2008 to 2022, the market has stretched into higher and more extreme valuations compared to history. Since the early nineties, the market has hugged the red line a lot more than the middle of the range at the blue line. Now that we are below the red line, we are in a relative value area for investment managers, as they have seen the market above the 20 P/E level most of their careers.

The next move for the market is unknown, but the fight between the headwinds of inflation forces and the desire for investment managers to make money before year-end should be an epic battle. Throw in the US Mid-terms and that adds more pressure.

The strength indexes we use at the Osprey Strategic website to evaluate when to put money to work are trying to turn up. If you are interested in getting help evaluating the market, check out the one-month trial at $7 on the homepage of OspreyStrategic.org. We are looking for the fourth buy point of the year right now. The last three were very short. Will this one be the one that extends into the next bull market?

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Economics

Stocks That Do Well in a Recession: Top 6 Companies to Buy

Here are six stocks that do well in a recession with strong cash positions, brand power, and market positions.
The post Stocks That Do Well in a Recession:…

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New predictions from Goldman Sachs (NYSE: GS) show a 30% chance of a recession in the next year. As a result, investors are scrambling to find stocks that do well in a recession to protect their returns.

Inflation unexpectedly rose 8.6% from last year, its highest since 1981. Meanwhile, the Fed is aggressively hiking interest rates to combat it.

Raising interest rates can slow economic growth. Although this can be good for taming inflation, there are concerns it can spark a recession. With this in mind, companies are already seeing slower growth with higher inventory levels.

For example, the CEO mentioned changing consumer behavior on Target’s (NYSE: TGT) Q1 earnings call. As a result, softer sales are leading to inventory levels well over pre-pandemic levels.

At the same time, some industries outperform during recessions. For instance, discount stores, fast food, and healthcare saw higher demand in the past few recessions.

During a recession, consumers are more cost-aware. They look to save money. So, cheaper options or necessities are solid investment ideas.

Below are six stocks that do well in a recession with strong cash positions, brand power, and market positions.

What Are the Best Stocks That Do Well in a Recession?

A recession means the economy is shrinking. Not to be confused with a depression, a recession means a few quarters of slower economic growth.

So far, U.S. GDP shrank 1.5% in the first quarter. Yet the Atlanta Fed estimates 0% growth in Q2. Will we see more damage in the second quarter with inflation and labor cutting into costs?

Investors are piling into defensive stocks like food and healthcare. Check out the stocks that do well in a recession below to get your portfolio back in the green this year.

No. 6 Mckesson (NYSE: MCK)

  • Industry: Healthcare
  • Revenue Growth: 11%

Mckesson is the largest U.S. pharmaceutical distributor. As such, the company plays a critical role in the healthcare industry.

With expanding access to health care and a growing population, Mckesson is well-positioned to continue growing. Total U.S. prescription sales expect to reach 1.4T by 2026. Not only that, but MCK is streamlining the business, focusing on high-margin opportunities.

If a recession does happen, people still need their medicine. And Mckesson is one of three drug wholesalers handling over 90% of medication.

No. 5 TJX Companies (NYSE: TJX)

  • Industry: Discount Retailer
  • Revenue Growth: 32%

TJX Companies is well known for its fleet of discount stores, including TJ-Maxx, Marshalls, and HomeGoods.

The discount retailer is off to a strong start this year. Though sales missed slightly, EPS and profit margins improved. The performance shows the leading off-price retailer’s position as a consumer favorite.

TJX’s business model helps them catch trends for 20% to 60% off regular prices. Furthermore, the company will likely benefit from retailers offloading high inventory levels. If there is a recession, shoppers will continue looking for deals, and TJX is the best in the business.

No. 4 Coca Cola (NYSE: KO)

  • Industry: Soft Drinks
  • Revenue Growth: 18%

Coca-Cola is another brand favorite with a dominant market position. In fact, Coke owns and markets five of the top six nonalcoholic drinks globally.

The drink maker has an advantage, though. Coke can raise prices to offset the higher costs and still sell. On top of this, the company focuses on high-potential areas such as coffee and low sugar.

Coke grew revenue by 18% in the first quarter with a better product and price mix. Moreover, KO stock is holding up well this year as investors rush for safety.

No. 3 Mcdonald’s (NYSE: MCD)

  • Industry: Fast Food
  • Revenue Growth: 21%

As the largest fast-food company in the world, Mcdonald’s is a go-to favorite for fast, cheap food.

When consumers look to save money, expensive food is usually one of the first to go. For this reason, Mcdonald’s stock outperformed in 2008. Can Mickey D’s do it again?

The company’s growth strategy seems to be paying off so far. Global comp sales rose almost 12% in the first quarter while digital sales surpassed $5B.

Lastly, Mcdonald’s continues expanding its market share by focusing on a modern, digital transformation. However, below are the top two stocks to buy that do well in a recession

No. 2 Walmart (NYSE: WMT)

  • Industry: Discount SuperMarket
  • Revenue Growth: 2%

Walmart’s position as the largest global retailer continues to grow. By expanding into other revenue streams such as Walmart +, healthcare, and financial services, Walmart is further improving its earnings growth.

For example, comp sales have been growing significantly since last year. Not only that, but sales are increasing across the board.

Though inflation is shrinking Walmart’s bottom line, the company is in a strong position as we advance. The ability to lower prices during challenging times has worked out in Walmart’s favor. With this in mind, Walmart stock also grew during the 2008 recession.

No. 1 Dollar Tree (NASDAQ: DLTR)

  • Industry: Discount Store
  • Revenue Growth: 4%

After the first price rise in company history, higher margins are giving Dollar Tree new life. The hike is helping the company overcome higher costs. At the same time, the extra earnings allow DLTR to expand its selection.

Dollar Tree hit a new quarterly EPS record in Q1 of $2.37 as a result. It also opened 112 new stores in the quarter.

Meanwhile, the company plans to keep the momentum rolling with investments to add profitable growth. For example, Dollar Tree plans to upgrade data analytics, store systems, etc.

The company has a high return on invested capital (ROIC). In other words, the company is excellent at adding value for investors and consumers. To illustrate, DLTR stock gained almost 61% in 2008.

Will Buying Stocks That Do Well in a Recession Boost Returns

Recessions can cause high unemployment and painful losses. We have seen it before. But, buying stocks that do well in a recession can help buffer your portfolio from risk.

Don’t get me wrong, investing in a recession is challenging. Most assets lose significant value. Yet, a handful of companies see higher demand. With this in mind, these are the companies you will want to focus on.

For example, Walmart and Dollar Tree increased shareholder value during the last recession. With superior low-priced business models, they were able to attract cost-aware shoppers.

The most important things to consider are market position, brand power and the nature of the business. Companies with necessary items such as food, health care or utilities tend to perform well.

The post Stocks That Do Well in a Recession: Top 6 Companies to Buy appeared first on Investment U.

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Shiba Inu Price Prediction: Buy When Others Are Fearful?

When making a Shiba Inu price prediction, there are two big historical events to look at for this popular crypto.
The post Shiba Inu Price Prediction:…

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When making a Shiba Inu price prediction, there are two big historical events to look at. These events are the coin’s two massive surges in price. One of these surges came in the span of a few weeks in mid-2021. Then, towards the end of the year, the price surged again in an almost identical fashion. In both cases, the price retreated immediately afterward. If you want to make money buying Shina Inu Coin then the key is to buy it before the price surges. This means that you need to buy it when nobody is talking about Shiba Inu and the price isn’t moving. Basically, you need to buy it during a time like now.

NOTE: The past performance of an asset is never an indicator of future performance. Shiba Inu coin is a very volatile asset. There is no guarantee that it will ever spike in price again.

What is Shiba Inu?

Shiba Inu is a cryptocurrency that has very little utility and is more of an experiment in community building. It was created after Dogecoin, another dog-themed memecoin, surged in popularity. Shiba is known for having a cult following as well as being incredibly cheap. Each Shib costs just a fraction of a cent. Despite this, it currently has a market capitalization of $5.7 billion. It is also the 11th most popular coin on Coinbase.

One of the main reasons that investors buy Shiba Inu coin is because of Dogecoin. Dogecoin mainly started as a joke. However, it actually gained a massive following and even garnered the endorsement of billionaire Elon Musk. Many investors feel that since Elon Musk likes Dogecoin, it must be worth buying and holding. In the past, a simple tweet from Elon about Dogecoin has been enough to send Dogecoin’s price flying.

This is important because Shiba Inu’s price tends to rise/fall in sympathy with Dogecoin.

Elon Doubles Down

At the Qatar Economic Forum, Elon Musk recently reiterated his support for Dogecoin. Although he did not make an outright recommendation to buy it, he stated that he “personally supports” Dogecoin. Dogecoin’s price spiked on Elon’s statements. Accordingly, Shiba Inu’s price has spiked as well. As I write this, Shiba Inu coin is up 26% in the past week.

So does this mean that you should buy Shiba Inu?

Shiba Inu Price Prediction: Is it Time to Buy?

To start, you should never buy an investment based solely on someone’s recommendation. This is because everyone has a different risk tolerance. For example, Elon Musk is the richest man in the world. He could invest a billion dollars into Shiba Inu coin without thinking twice. He could also light a billion dollars on fire and not lose sleep. But, for many people, investing even just $100 into Shiba Inu is fairly risky. But, this doesn’t mean that buying Shiba Inu coin is always a bad idea.

Let’s examine my Shiba Inu price prediction.

Buy When Others are Fearful

There is a famous quote from Warren Buffet that goes, “You should sell stocks when others are greedy and buy them when others are fearful.” Essentially, Warren is saying that you should buy when everyone else is selling because this is when the asset’s price is the lowest. This same thinking could apply to Shiba Inu.

Most of 2020 and 2021 were full of incredible optimism in the investment world. Despite the global pandemic, the S&P500 surged 44% from 2020 to 2021. This even includes a 33% dip in early March. At the same time, we witnessed a frenzy of retail trading in investments like AMC, Dogecoin and GameStop. For a while, it seemed like nearly everyone was making cash hand over fist. Since the end of 2021, most of that has changed.

Today, we are officially in a bear market. The United States is experiencing inflation rates not seen since the 1980s. There is a land war in Europe between Russia and Ukraine. And, the entire global supply chain is still suffering from the effects of COVID-19. The economic outlook is bleaker than it’s been in years. Ironically, this could mean that it’s a good time to buy Shiba Inu.

Trying to predict when Shiba Inu coin will surge is nearly impossible. So, to make money in Shiba Inu you need to establish a position early on before everyone else does. If you wait until the coin has already surged then you’re too late. Right now, almost nobody is talking about buying Shiba Inu because there’s so much risk in the world. Counterintuitively, this could mean that it’s a perfect time to buy. This style of investing is known as contrarian investing.

Final Thoughts: Shiba Inu Coin

At the end of the day, you should associate buying Shiba Inu very closely with gambling. Remember that Shiba Inu has no underlying value or use. Additionally, there is no way to predict when its price will surge. This makes it very similar to putting money on red money at a roulette table. This doesn’t mean that you should never buy it. Just that you should only ever do so with money that you can afford to lose.

If you want to buy Shiba Inu then this could be as good a time as any. Nobody is talking about Shiba and the coin’s price has come nearly all the way down from its last surge. As long as you are patient and won’t need your investment anytime soon then you’ll be in a good position to wait for the next (potential) spike.

I hope that you’ve enjoyed this Shiba Inu price prediction. Please remember that I’m not a financial advisor and am just offering my own research and commentary. As usual, please base all investment decisions on your own due diligence.

The post Shiba Inu Price Prediction: Buy When Others Are Fearful? appeared first on Investment U.

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