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Mining BTC is harder than ever — 5 things to know in Bitcoin this week
Bitcoin wakes up to near $28,000 ahead of a jump to a new BTC mining difficulty record as billionaire investor Ray Dalio conjures the chilling thought…
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Bitcoin wakes up to near $28,000 ahead of a jump to a new BTC mining difficulty record as billionaire investor Ray Dalio conjures the chilling thought of "World War III."
Bitcoin (BTC) starts a new week firmly back in the “Uptober” spirit as the weekly close gives way to a classic short squeeze.
In a return to classic BTC price volatility of the kind seen earlier in the month, the largest cryptocurrency is tackling $28,000 ahead of the first Wall Street open.
While still in an established trading range, Bitcoin is keeping traders on their toes — both longs and shorts are getting caught out by short-term spot price moves, and liquidations are mounting.
Sentiment is fluctuating in step with these moves. Heading toward the top of the range, Bitcoin sees a flurry of bullish projections, with these replaced by fear and foreboding when downside reenters.
Well-known market commentators thus remain overall cautious, even as October — traditionally Bitcoin’s best-performing month — plays out.
Behind the scenes, the signs are solid — network fundamentals are headed to new all-time highs, and difficulty is due what could end up its third-largest hike of 2023.
With macroeconomic data giving way to a focus on geopolitical tensions in the Middle East this week, there is plenty for Bitcoin investors to keep an eye on when it comes to external sources of BTC price volatility.
Cointelegraph takes a closer look at these market phenomena and more in Cointelegraph Markets’ weekly rundown of BTC price triggers waiting in the wings.
BTC price: Short squeezes and "old" coins
Weekly close volatility on Bitcoin did not disappoint this week, with one short squeeze following another to see BTC/USD add $1,000, data from Cointelegraph Markets Pro and TradingView confirmed.
The climate headed into the first Wall Street open is decidedly different to that over the weekend and before, where downside characterized the landscape amid problematic macroeconomic reports from the United States.
Now, optimism is returning, with Michaël van de Poppe, founder and CEO of MN Trading, calling the trip to multi-day highs of $27,975 a “great move.”
“Dips are for buying, most optimal entry would be $27,300,” he told X subscribers in part of the day’s commentary.
Van de Poppe further predicted continuation of the uptrend.
Covering the impetus behind the latest action, monitoring resource CoinGlass noted liquidations among short BTC positions.
“At 27450, a large number of shorts have been liquidated,” it concluded alongside a liquidation heatmap for BTC/USDT perpetual swaps on largest global exchange Binance.
“Next focus on the liquidation levels of 26500 and 27660.”
Popular trader Crypto Tony was more cautious, having previously warned of the potential for significant downside pressure taking Bitcoin all the way back to $20,000 in the coming months.
$BTC / $USD - Update
— Crypto Tony (@CryptoTony__) October 16, 2023
Stopped out as we reclaimed the $27,300 resistance zone, and now just sat waiting for my next trigger. The bulls could very well take us up to $29,000 resistance zone, but remember this is a heavy area
If you are longing now just be cautious pic.twitter.com/aQGF1ZVJuL
For research firm Santiment, meanwhile, there was more to the change of tone than merely short squeezes.
“Older” BTC was on the move, it showed, having left their wallets after an extended period of dormancy immediately prior to the return to $27,000.
“The largest amount of dormant $BTC changing wallets since July, these spikes in our Age Consumed metric indicate price direction reversals,” part of accompanying comments on an illustrative chart stated.
Dalio warns over 50/50 outcome of "World War III"
In contrast to last week, the macro landscape in the coming days contains less by way of significant data prints from the U.S.
Instead, nerves over potential market impact from the ongoing Israel-Hamas conflict are taking center stage, while the specter of inflation lingers in the background.
The latter was previously all too clear, as successive data releases last week and before showed U.S. inflation persisting beyond market expectations.
The Federal Reserve’s next meeting to set interest rates is due on Nov. 1, and with two weeks remaining, inflation cues will be all too important for risk asset sentiment.
“2 weeks until the November Fed meeting,” financial commentary resource The Kobeissi Letter summarized on X while shortlisting the week’s main U.S. financial events.
These include a speech from Fed Chair Jerome Powell, one of a total of 17 Fed speakers due to take to the stage this week.
Key Events This Week:
— The Kobeissi Letter (@KobeissiLetter) October 15, 2023
1. Retail Sales data - Tuesday
2. Housing Starts data - Wednesday
3. Existing Home Sales data - Thursday
4. Fed Chair Powell Speaks - Thursday
5. Q3 2023 earnings season begins
6. Total of 17 Fed speaker events
2 weeks until the November Fed meeting.
In a sign of the extent to which politics may end up influencing sentiment, Kobeissi was one of many who referenced a grim forecast from billionaire investor Ray Dalio, founder of Bridgewater Associates, the world’s largest hedge fund.
In a LinkedIn post on Oct. 12, Dalio warned that the risk of “World War III” occurring had increased to 50% over the past two years.
“Fortunately, the progression toward a world war between the biggest powers (the US and China) has not yet crossed the irreversible line from being containable (which it is now) to becoming a brutal war between the biggest powers and their allies,” he wrote.
“If these major powers do have direct fighting with each other, in which one side kills a significant number of people on the other side, we will see the transition from contained pre-hot-war conflicts to a brutal World War III.”
GBTC "discount" closes in on two-year minimum
Beyond BTC price action, a firm resurgence is underway in the biggest Bitcoin institutional investment vehicle.
The Grayscale Bitcoin Trust (GBTC) is now trading at its smallest discount to net asset value (NAV) — the Bitcoin spot price — since December 2021.
As Cointelegraph reported, the discount, which was once a premium, was almost 50% earlier in the year, and GBTC’s turnaround has come in tandem with legal victories for operator Grayscale over U.S. regulators.
Now, markets appear to be more confident than ever that a spot price exchange-traded fund (ETF) — which Grayscale plans to create and launch out of GBTC — will get the go-ahead, opening up a flood of institutional interest in Bitcoin in the process.
“One significant feature of GBTC is that it doesn't offer a straightforward mechanism for redeeming shares for actual Bitcoin, and it trades over-the-counter (OTC),” popular trader and podcast host Scott Melker, known as “The Wolf of All Streets,” wrote in part of recent X analysis.
“This structural element can lead to instances where its market price deviates from the underlying BTC value. Factors like market speculation, investor sentiment, liquidity constraints, and even regulatory news can influence this price divergence.”
Melker continued that the door opening to GBTC becoming an ETF was “still far from a sure thing.”
“Concurrently, the U.S. Securities and Exchange Commission (SEC) is also scrutinizing several other spot Bitcoin ETF proposals, including those from financial giants like Fidelity, Blackrock, and Franklin Templeton, which adds another layer of complexity and uncertainty to the landscape,” he noted.
Mining difficulty set for imminent new record
The latest BTC price increase has helped boost prognoses for Bitcoin network fundamentals.
Ahead of its next automated readjustment on Oct. 16, Bitcoin difficulty is currently forecast to expand to new all-time highs, per data from monitoring resource BTC.com.
This is nothing new in 2023, the year in which both difficulty and mining hash rate have frequently achieved new records. The upcoming difficulty hike, however, could make it into the top three year-to-date at nearly 7%.
Should it lock in, difficulty will cross the 60 trillion mark for the first time, reflecting the increasingly stiff competition among miners and unparalleled Bitcoin network security.
Hash rate estimates meanwhile vary significantly by resource. Raw hash rate data from MiningPoolStats shows the latest all-time high of 497.66 exahashes per second (EH/s) hitting on Oct. 9.
The high difficulty combined with comparatively modest BTC price levels inevitably opens questions over miner profitability. With expenses running ever higher per bitcoin, concerns periodically appear over how incentivized miners are to continue.
Just as with hash rate, estimates vary over how expensive the per-bitcoin aggregate production cost really is, with a multitude of factors including physical location all playing a part in the tally.
As Cointelegraph reported, next year’s block subsidy halving will additionally cut the amount of BTC received per mined block by 50%.
“I think price is okay for miners atm, but come halving and increasing difficulty needs to increase rapidly,” James Straten, research and data analyst at crypto insights firm CryptoSlate, wrote in part of X commentary last week.
A precarious "Uptober"
Does the fate of “Uptober” 2023 hang in the balance?
Related: Bitcoin signals potential range expansion— Will SOL, LDO, ICP and VET follow?
Even modest changes in BTC spot price can influence the month-to-date gains for October thanks to the strength of the current trading range, now in place since March.
#Bitcoin We did not get Uptober or Rektober but instead we got Choptober.
— Daan Crypto Trades (@DaanCrypto) October 14, 2023
This would be the first time after 4 years where Oktober would end up red.
Last month was the first green September after 6 years.
We're only halfway through the month though so a lot can change. pic.twitter.com/NsoVvH5O7D
While negative just last week, the push to $28,000 now means that BTC/USD is up 3.5% since the beginning of the month.
With two weeks until the monthly close, Bitcoin’s ultimate performance remains anyone’s guess. 3.5%, while far from poor, would still constitute Bitcoin’s weakest October month since 2018.
Data from CoinGlass further shows the worst October on record in 2014 produced “only” 12% losses for Bitcoin, leaving the door open for a new red record should conditions deteriorate.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
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Uncategorized
February Employment Situation
By Paul Gomme and Peter Rupert The establishment data from the BLS showed a 275,000 increase in payroll employment for February, outpacing the 230,000…
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By Paul Gomme and Peter Rupert
The establishment data from the BLS showed a 275,000 increase in payroll employment for February, outpacing the 230,000 average over the previous 12 months. The payroll data for January and December were revised down by a total of 167,000. The private sector added 223,000 new jobs, the largest gain since May of last year.
Temporary help services employment continues a steep decline after a sharp post-pandemic rise.
Average hours of work increased from 34.2 to 34.3. The increase, along with the 223,000 private employment increase led to a hefty increase in total hours of 5.6% at an annualized rate, also the largest increase since May of last year.
The establishment report, once again, beat “expectations;” the WSJ survey of economists was 198,000. Other than the downward revisions, mentioned above, another bit of negative news was a smallish increase in wage growth, from $34.52 to $34.57.
The household survey shows that the labor force increased 150,000, a drop in employment of 184,000 and an increase in the number of unemployed persons of 334,000. The labor force participation rate held steady at 62.5, the employment to population ratio decreased from 60.2 to 60.1 and the unemployment rate increased from 3.66 to 3.86. Remember that the unemployment rate is the number of unemployed relative to the labor force (the number employed plus the number unemployed). Consequently, the unemployment rate can go up if the number of unemployed rises holding fixed the labor force, or if the labor force shrinks holding the number unemployed unchanged. An increase in the unemployment rate is not necessarily a bad thing: it may reflect a strong labor market drawing “marginally attached” individuals from outside the labor force. Indeed, there was a 96,000 decline in those workers.
Earlier in the week, the BLS announced JOLTS (Job Openings and Labor Turnover Survey) data for January. There isn’t much to report here as the job openings changed little at 8.9 million, the number of hires and total separations were little changed at 5.7 million and 5.3 million, respectively.
As has been the case for the last couple of years, the number of job openings remains higher than the number of unemployed persons.
Also earlier in the week the BLS announced that productivity increased 3.2% in the 4th quarter with output rising 3.5% and hours of work rising 0.3%.
The bottom line is that the labor market continues its surprisingly (to some) strong performance, once again proving stronger than many had expected. This strength makes it difficult to justify any interest rate cuts soon, particularly given the recent inflation spike.
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Mortgage rates fall as labor market normalizes
Jobless claims show an expanding economy. We will only be in a recession once jobless claims exceed 323,000 on a four-week moving average.
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Everyone was waiting to see if this week’s jobs report would send mortgage rates higher, which is what happened last month. Instead, the 10-year yield had a muted response after the headline number beat estimates, but we have negative job revisions from previous months. The Federal Reserve’s fear of wage growth spiraling out of control hasn’t materialized for over two years now and the unemployment rate ticked up to 3.9%. For now, we can say the labor market isn’t tight anymore, but it’s also not breaking.
The key labor data line in this expansion is the weekly jobless claims report. Jobless claims show an expanding economy that has not lost jobs yet. We will only be in a recession once jobless claims exceed 323,000 on a four-week moving average.
From the Fed: In the week ended March 2, initial claims for unemployment insurance benefits were flat, at 217,000. The four-week moving average declined slightly by 750, to 212,250
Below is an explanation of how we got here with the labor market, which all started during COVID-19.
1. I wrote the COVID-19 recovery model on April 7, 2020, and retired it on Dec. 9, 2020. By that time, the upfront recovery phase was done, and I needed to model out when we would get the jobs lost back.
2. Early in the labor market recovery, when we saw weaker job reports, I doubled and tripled down on my assertion that job openings would get to 10 million in this recovery. Job openings rose as high as to 12 million and are currently over 9 million. Even with the massive miss on a job report in May 2021, I didn’t waver.
Currently, the jobs openings, quit percentage and hires data are below pre-COVID-19 levels, which means the labor market isn’t as tight as it once was, and this is why the employment cost index has been slowing data to move along the quits percentage.
3. I wrote that we should get back all the jobs lost to COVID-19 by September of 2022. At the time this would be a speedy labor market recovery, and it happened on schedule, too
Total employment data
4. This is the key one for right now: If COVID-19 hadn’t happened, we would have between 157 million and 159 million jobs today, which would have been in line with the job growth rate in February 2020. Today, we are at 157,808,000. This is important because job growth should be cooling down now. We are more in line with where the labor market should be when averaging 140K-165K monthly. So for now, the fact that we aren’t trending between 140K-165K means we still have a bit more recovery kick left before we get down to those levels.
From BLS: Total nonfarm payroll employment rose by 275,000 in February, and the unemployment rate increased to 3.9 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in health care, in government, in food services and drinking places, in social assistance, and in transportation and warehousing.
Here are the jobs that were created and lost in the previous month:
In this jobs report, the unemployment rate for education levels looks like this:
- Less than a high school diploma: 6.1%
- High school graduate and no college: 4.2%
- Some college or associate degree: 3.1%
- Bachelor’s degree or higher: 2.2%
Today’s report has continued the trend of the labor data beating my expectations, only because I am looking for the jobs data to slow down to a level of 140K-165K, which hasn’t happened yet. I wouldn’t categorize the labor market as being tight anymore because of the quits ratio and the hires data in the job openings report. This also shows itself in the employment cost index as well. These are key data lines for the Fed and the reason we are going to see three rate cuts this year.
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Inside The Most Ridiculous Jobs Report In History: Record 1.2 Million Immigrant Jobs Added In One Month
Inside The Most Ridiculous Jobs Report In History: Record 1.2 Million Immigrant Jobs Added In One Month
Last month we though that the January…
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Last month we though that the January jobs report was the "most ridiculous in recent history" but, boy, were we wrong because this morning the Biden department of goalseeked propaganda (aka BLS) published the February jobs report, and holy crap was that something else. Even Goebbels would blush.
What happened? Let's take a closer look.
On the surface, it was (almost) another blockbuster jobs report, certainly one which nobody expected, or rather just one bank out of 76 expected. Starting at the top, the BLS reported that in February the US unexpectedly added 275K jobs, with just one research analyst (from Dai-Ichi Research) expecting a higher number.
Some context: after last month's record 4-sigma beat, today's print was "only" 3 sigma higher than estimates. Needless to say, two multiple sigma beats in a row used to only happen in the USSR... and now in the US, apparently.
Before we go any further, a quick note on what last month we said was "the most ridiculous jobs report in recent history": it appears the BLS read our comments and decided to stop beclowing itself. It did that by slashing last month's ridiculous print by over a third, and revising what was originally reported as a massive 353K beat to just 229K, a 124K revision, which was the biggest one-month negative revision in two years!
Of course, that does not mean that this month's jobs print won't be revised lower: it will be, and not just that month but every other month until the November election because that's the only tool left in the Biden admin's box: pretend the economic and jobs are strong, then revise them sharply lower the next month, something we pointed out first last summer and which has not failed to disappoint once.
In the past month the Biden department of goalseeking stuff higher before revising it lower, has revised the following data sharply lower:
— zerohedge (@zerohedge) August 30, 2023
- Jobs
- JOLTS
- New Home sales
- Housing Starts and Permits
- Industrial Production
- PCE and core PCE
To be fair, not every aspect of the jobs report was stellar (after all, the BLS had to give it some vague credibility). Take the unemployment rate, after flatlining between 3.4% and 3.8% for two years - and thus denying expectations from Sahm's Rule that a recession may have already started - in February the unemployment rate unexpectedly jumped to 3.9%, the highest since February 2022 (with Black unemployment spiking by 0.3% to 5.6%, an indicator which the Biden admin will quickly slam as widespread economic racism or something).
And then there were average hourly earnings, which after surging 0.6% MoM in January (since revised to 0.5%) and spooking markets that wage growth is so hot, the Fed will have no choice but to delay cuts, in February the number tumbled to just 0.1%, the lowest in two years...
... for one simple reason: last month's average wage surge had nothing to do with actual wages, and everything to do with the BLS estimate of hours worked (which is the denominator in the average wage calculation) which last month tumbled to just 34.1 (we were led to believe) the lowest since the covid pandemic...
... but has since been revised higher while the February print rose even more, to 34.3, hence why the latest average wage data was once again a product not of wages going up, but of how long Americans worked in any weekly period, in this case higher from 34.1 to 34.3, an increase which has a major impact on the average calculation.
While the above data points were examples of some latent weakness in the latest report, perhaps meant to give it a sheen of veracity, it was everything else in the report that was a problem starting with the BLS's latest choice of seasonal adjustments (after last month's wholesale revision), which have gone from merely laughable to full clownshow, as the following comparison between the monthly change in BLS and ADP payrolls shows. The trend is clear: the Biden admin numbers are now clearly rising even as the impartial ADP (which directly logs employment numbers at the company level and is far more accurate), shows an accelerating slowdown.
But it's more than just the Biden admin hanging its "success" on seasonal adjustments: when one digs deeper inside the jobs report, all sorts of ugly things emerge... such as the growing unprecedented divergence between the Establishment (payrolls) survey and much more accurate Household (actual employment) survey. To wit, while in January the BLS claims 275K payrolls were added, the Household survey found that the number of actually employed workers dropped for the third straight month (and 4 in the past 5), this time by 184K (from 161.152K to 160.968K).
This means that while the Payrolls series hits new all time highs every month since December 2020 (when according to the BLS the US had its last month of payrolls losses), the level of Employment has not budged in the past year. Worse, as shown in the chart below, such a gaping divergence has opened between the two series in the past 4 years, that the number of Employed workers would need to soar by 9 million (!) to catch up to what Payrolls claims is the employment situation.
There's more: shifting from a quantitative to a qualitative assessment, reveals just how ugly the composition of "new jobs" has been. Consider this: the BLS reports that in February 2024, the US had 132.9 million full-time jobs and 27.9 million part-time jobs. Well, that's great... until you look back one year and find that in February 2023 the US had 133.2 million full-time jobs, or more than it does one year later! And yes, all the job growth since then has been in part-time jobs, which have increased by 921K since February 2023 (from 27.020 million to 27.941 million).
Here is a summary of the labor composition in the past year: all the new jobs have been part-time jobs!
But wait there's even more, because now that the primary season is over and we enter the heart of election season and political talking points will be thrown around left and right, especially in the context of the immigration crisis created intentionally by the Biden administration which is hoping to import millions of new Democratic voters (maybe the US can hold the presidential election in Honduras or Guatemala, after all it is their citizens that will be illegally casting the key votes in November), what we find is that in February, the number of native-born workers tumbled again, sliding by a massive 560K to just 129.807 million. Add to this the December data, and we get a near-record 2.4 million plunge in native-born workers in just the past 3 months (only the covid crash was worse)!
The offset? A record 1.2 million foreign-born (read immigrants, both legal and illegal but mostly illegal) workers added in February!
Said otherwise, not only has all job creation in the past 6 years has been exclusively for foreign-born workers...
... but there has been zero job-creation for native born workers since June 2018!
This is a huge issue - especially at a time of an illegal alien flood at the southwest border...
... and is about to become a huge political scandal, because once the inevitable recession finally hits, there will be millions of furious unemployed Americans demanding a more accurate explanation for what happened - i.e., the illegal immigration floodgates that were opened by the Biden admin.
Which is also why Biden's handlers will do everything in their power to insure there is no official recession before November... and why after the election is over, all economic hell will finally break loose. Until then, however, expect the jobs numbers to get even more ridiculous.
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