Halving Hype Drives Second-Strongest Spot Volume on Record. The run-up to Bitcoin’s halving has driven near-record volumes, with April 30 posting the second-largest daily trade on record.
Pre-halving speculation has driven historic volumes of crypto trade, with April 30 producing Sell bitcoin to Debit Card the second-strongest single day for volume on record according to a report published by market data aggregator.
Notional volume for BTC options on Chicago Mercantile Exchange, or CME, also tagged a new record in recent days, with 202 contracts changing hands on May 5.
The dominance of Tether (USDT) on the markets has continued to extend, with USDT pairings representing 74% of all trade between Bitcoin and stablecoins or fiat currencies.
Derivatives volumes retrace by one-quarter.
The perpetual funding rate turns to positive territory, suggesting a positive market sentiment
The perpetual funding rate serves as a useful indicator to gauge overall market sentiment. When the rate is positive, long positions periodically pay short positions and vice versa. Funding rates also tend to correlate with market sentiment, meaning that when the market is strongly bullish or bearish, funding rates tend to be positive or negative, respectively.
The Bitcoin options flows can also confirm the belief that traders are buying options for the purpose of hedging, as there are more put buyers than put sellers in volume. If there is significant volume on the sell side, it reflects market participants’ concern about a potential market downturn.
4 Reasons the Bitcoin Halving Won't Trigger a Big ‘Miner Capitulation’. Bitcoin miners are not likely to see capitulation and especially a “mining death spiral” after the 2020 halving due to four major reasons.
A popular narrative revolving around the Bitcoin (BTC) halving is that it may trigger the capitulation of miners. But, it is premature to suggest many miners will shut down in 2020 and bring the price of cryptocurrencies down as a result.
Some industry executives believe that the price of Bitcoin may drop following the May 11 halving. After the block rewards of Bitcoin miners get cut in half, their revenues sell bitcoin to cash also drop substantially. Typically, it affects overleveraged and small miners, forcing them to shut down their machines.
This will be the most brutal Bitcoin Halving in history. Production cost is about to double to $14,000. 70% above the current price.
A widespread theory is that as miners capitulate, they will begin to sell Bitcoin in the cryptocurrency exchange market and add significant selling pressure, which leads to more miners leaving and so on, resulting in the mythical “mining death spiral.”
This year, there are many variables that may prevent such a trend from occurring. Four main arguments against the capitulation of miners are: cheaper electricity in China decreased operational expenses due to weaker currencies, drop in energy price due to government lockdowns worldwide, and the adjustment of mining difficulty.
China reportedly comprises roughly 65% of all Bitcoin computing power, according to the latest data.
Moreover, the Chinese province of Sichuan is soon to enter the rainy season. Many electricity service providers in the province rely on hydropower to generate energy. When there is an abundance of water, it allows hydro plants to generate more energy than usual. exchange bitcoin to western union
Bitcoin mining difficulty adjustment. When the number of miners mining Bitcoin declines as a result of low price and fewer block rewards after the halving, the difficulty of mining BTC automatically adjusts to maintain a steady block interval.
The term “mining” refers to the creation of new Bitcoins as a reward for contributing computing resources to the network. The network automatically adjusts how difficult it is to mine BTC every 2,016 blocks if the computing power, also known as the hash rate, drops (or rises).
The mining difficulty adjustment mechanism stops a cascade of miner capitulation from occurring, as it will get cheaper to mine BTC when the hash rate drops.