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New BTC miner capitulation? 5 things to know in Bitcoin this week

Bitcoin miners face a shakeout, one metric warns as the November monthly close looms for BTC.
Bitcoin (BTC) prepares to exit a grim…

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Bitcoin miners face a shakeout, one metric warns as the November monthly close looms for BTC.

Bitcoin (BTC) prepares to exit a grim November just above $16,000 — what could be on the menu for BTC price this week?

In a time of what analyst Willy Woo has called “unprecedented deleveraging,” Bitcoin is far from out of the woods after losing over 20% this month.

The impact of the FTX implosion remains unknown, and warning signs continue to flow in even after the first wave of crypto business bankruptcies.

In particular this week, eyes are on miners, who are seeing profits squeezed by falling spot price and surging hash rate.

Upheaval is in the air, and should another “capitulation” among miners occur, the entire ecosystem could be in for a further shock.

As “max pain” looms for the average hodler, Cointelegraph takes a look at some of the main factors affecting BTC/USD in the short term.

Bitcoin miners due "capitulation" — analyst

Like others, Bitcoin miners are seeing a major squeeze when it comes to selling accumulated BTC at a profit.

It remains to be seen exactly how much financial pain the average miner is in, but one classic metric is preparing to call “capitulation” once more.

Just months after the last such period, Hash Ribbons is warning that conditions are again becoming unsustainable.

Hash Ribbons uses two moving averages of hash rate to infer conclusions about miner participation in the Bitcoin network. Crossovers of the trend lines denote capitulatory and recovery phases.

For Kripto Mevismi, a contributor to on-chain analytics platform CryptoQuant, the time is approaching for the former to reappear.

“So right now bitcoin difficulty is really high for miners so that means; costs are getting higher and doing business in this kind of environment is getting harder,” he wrote in a blog post.

“That's why miners do not work in full force. If they have efficient- new generation mining machines, they put them into work but that's all. Inflation is high and people feels effect of living costs, bitcoin price is declining, mining cost and difficulty is getting higher. Tough environment for miners.”
Bitcoin Hash Ribbons chart. Source: LookIntoBitcoin

Kripto Mevismi added that a significant change in mining difficulty could help the situation.

Estimates from BTC.com for the next adjustment on Dec. 6 put the difficulty drop at 6.4% at the time of writing. Should it go to fruition, it will be the largest such drop since July 2021.

BTC.com and others likewise estimate that hash rate is now declining from record levels as miners wind down operations.

Bitcoin network fundamentals overview (screenshot). Source: BTC.com

BTC/USD eyes volatility into monthly close

BTC/USD managed to stave off significant weekly losses at the latest candle close on Nov. 27.

At around $16,400, the weekly close was a whisker higher than the previous week, with the pair still circling two-year lows, data from Cointelegraph Markets Pro and TradingView shows.

BTC/USD 1-week candle chart (Bitstamp). Source: TradingView

With a lack of volatility characterizing intraday price action, traders and analysts remain cautious on the next step.

“It's a long holiday weekend so expect things to get interesting as we move towards the Weekly and Monthly close,” on-chain analytics resource Material Indicators wrote in part of a tweet last week.

A subsequent post reiterated that the Nov. 30 close would likely spark fresh instability, with BTC/USD currently 21.25% down versus the start of the month.

This makes November 2022 Bitcoin’s worst November since its previous bear market year in 2018, data from Coinglass confirms.

BTC/USD monthly returns chart (screenshot). Source: Coinglass

On shorter timeframes, popular trader Crypto Tony meanwhile highlighted $16,000 as a key zone to flip for higher levels to enter next, while keeping mindful of the longer-term trend.

BTC/USD annotated chart. Source: Crypto Tony/ Twitter

“Lower highs along with consolidating below a major resistance zone. If you want to enter safely, wait for a flip of the lows,” he summarized at the weekend.

BTC/USD annotated chart. Source: Crypto Tony/ Twitter

As Cointelegraph extensively reported, Bitcoin’s next bear market bottom is the discussion point of the moment at present, and certain targets have become more popular than others.

One vocal commentator calling for further downside, Il Capo of Crypto, thus reiterated his opinion that $12,000 could be next for BTC/USD.

Highlighting the relationship between perpetual futures trading volume and spot price, he warned that current market structure was not supportive of further gains.

“12000-14000 is likely. 40-50% drop for altcoins,” he stressed.

Under the Bitcoin sea, hodlers accumulate

Big or small, the population of the Bitcoin ecosystem is “aggressively” adding to its BTC exposure this month.

In a positive sign for a future supply squeeze — where demand comes up against a larger portion of illiquid supply — accumulation appears to be gathering pace.

According to on-chain analytics firm Glassnode, it is retail investors mostly responsible for the current trend.

The smaller investors, referred to variously as “crabs” and “shrimps” depending on wallet balance, are increasing in numbers.

“Bitcoin Shrimps (< 1$BTC) have added 96.2k $BTC to their holdings since FTX collapsed, an all-time high balance increase. This cohort now now hold over 1.21M $BTC, equivalent to 6.3% of the circulating supply,” Glassnode showed in a Twitter thread about the phenomenon.

Bitcoin shrimp net position change chart. Source: Glassnode/ Twitter

A further post noted:

“Crabs (up to 10 $BTC) have also seen aggressive balance increase of 191.6k $BTC over the last 30-days. This is a convincing all-time-high, eclipsing the July 2022 peak of 126k $BTC/month.”
Bitcoin "crab" net position change chart. Source: Glassnode/ Twitter

As Cointelegraph reported, part of the increase in smaller wallet numbers could be down to exchange users withdrawing funds to private storage.

Woo flags inbound "max pain"

For Willy Woo, the analyst behind popular statistics resource Woobull, on-chain metrics are pointing to Bitcoin’s next macro bottom being imminent.

Highlighting three of them this weekend, Woo showed that to all intents and purposes, Bitcoin is behaving exactly as it did in the pit of previous bear markets.

The portion of the BTC supply held at an unrealized loss, for example, is approaching macro lows, a phenomenon covered by the “Max Pain” model.

“Bitcoin bottom is getting close under the Max Pain model. Historically BTC price reaches macro cycle bottoms when 58%-61% of coins are underwater (orange). Green shading adjusts for the coins locked up inside GBTC Trust,” Woo explained alongside a chart.

Bitcoin Max Pain annotated chart. Source: Willy Woo/ Twitter

Continuing, he noted that the MVRV Ratio value for BTC/USD is also targeting a “buy” zone, which has historically given investors maximum profit potential.

MVRV is Bitcoin’s market cap divided by realized cap — the aggregate price at which each Bitcoin last moved. The resulting number has delivered buy and sell zones corresponding to price extremes.

“MVRV ratio is deep inside the value zone,” Woo’s commentary stated.

“Under this signal we were in already bottoming (1) until the latest FTX white swan debacle brought us back into a buy zone (2).”
Bitcoin MVRV annotated chart. Source: Willy Woo/ Twitter

Woo’s third chart, Cumulative Value Days Destroyed (CVDD), was recently covered by Cointelegraph.

“Use these charts at your own discretion, we are in an unprecedented time of deleveraging,” he added, cautioning that “Past cycles do not necessarily reflect future ones.”

Macro mood rocked by China protests

Some key economic data from the United States is due this week, but crypto analysts are more focused on China.

With an already fragile status quo hanging on inflation trends, unrest in the world’s factory could unsettle market performance, some warn.

China is in the grip of a wave of protests against the government’s policy on COVID-19, with multiple cities defying lockdowns to demand an end to “COVID zero.”

With this in mind, risk assets could be in for a rough ride if the situation spirals out of control.

“Crucial area of Bitcoin couldn't break, so we're still consolidating within that range. On support now,” Michaël van de Poppe, founder and CEO of trading firm Eight, explained.

“If this is lost, I'd expect new lows to be seen on the markets, probably depending on China & FTX contagion this week.”

Even mainstream media were warning of potential repercussions on the day, with John Toro, head of trading at exchange Independent Reserve, telling Bloomberg that “elevated contagion risk is being profiled into the cryptocurrency complex.”

Asian stock markets were modestly down on the day, with Hong Kong’s Hang Seng and the Shanghai Composite Index down 1.6% and 0.75%, respectively at the time of writing.

Hang Seng Index 1-day candle chart. Source: TradingView

Bonus: Bitcoin bottoms in crude oil

On a related macro note, Bitcoin is now in line for “outperformance” in U.S. dollar terms, one well-known analyst has said.

Related: Bitcoin may need $1B more on-chain losses before new BTC price bottom

In WTI crude oil terms, BTC price action is already at a macro low — and history calls for a resurgence, which includes a significant appreciation trend against USD.

“We're finally at channel bottom,” TechDev confirmed at the weekend.

“Bitcoin's crude oil (energy) purchasing power topped in April 2021. Now looks poised for another leg of outperformance (and rise in USD value).”
BTC/WTI annotated chart. Source: TechDev/ Twitter

An accompanying chart drew specific parallels to Bitcoin’s performance at the pit of the last bear market in late 2018.

As Cointelegraph reported, meanwhile, TechDev is far from the only voice calling for upside to characterize BTC price action going into the new year.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

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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.  

2-US_Job_Quits_Rate-1-2

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:

IMG_5092

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%
IMG_5093_320f22

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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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 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.

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...

Source: St Louis Fed FRED Native Born and Foreign Born

... 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.

Tyler Durden Fri, 03/08/2024 - 13:30

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