In the weeks following the decimating FTX collapse the cryptocurrency market has faced the onset of a harsh crypto winter. However, despite the severity of the current bear cycle, many coins within the top 100 have begun to minorly rebound, with gains between 1-5% acting as an average range for the majority. Yet, in an unprecedented rebound, Ethereum has climbed by 6.5% in the past week and appears to be gaining bullish momentum in spite of the current market climate. Yet in more bearish news, a recent Sam Bankman-Fried interview has surfaced, with many speculating that his claims and apologies are ‘delusional’ in light of him suggesting that FTX US customers will be fully reimbursed whilst the remaining customer base will not be, with the future of their compensation in light of the crash remaining under speculation. On a similar bearish note, BTC’s hashrate has continued to decline in light of miners ‘giving up’, suggesting that the near future for the asset may be one tortured by a bear cycle.
Across the coming week it is likely that the current bullish momentum witnessed in the top 100 will continue to extend, yet potentially slow as bearish sentiments continue to shroud the market as news continues to unfold surrounding bankruptcies and exploits of major exchanges. This momentum may potentially extend to Ethereum and propel its rally further into bullish territory. However, this bullishness may end here, as the continually declining BTC Hashrate could signal jeopardy lying in the future for Bitcoin
SBF Regarded As ‘Delusional’ In New Interview
The FTX exchange collapse has reverberated throughout the entire market, crashing and bankrupting a plethora of protocols, leaching funds from investors, and crashing the cryptocurrency market. The assumed primary culprit remains the founder and CEO Sam Bankman-Fried who has remained elusive and apologetic in light of the crash, yet has been hesitant to reveal future plans for compensating users and attempting to rectify the FTX collapse. However, SBF partook in a shocking New York Times interview where he addressed the situation, where he acknowledged the intention to fully reimburse FTX US users, while the future for the remainder of FTX’s user base remains fundamentally uncertain.
Addressing the live interview, Galaxy’s CEO, Mike Novogratz stated that he believes SBF is ‘delusional’ and that he will spend time in jail for his actions, albeit the extent of which remains yet unknown. In an interview for CNBC, Novogratz revealed to Andrew Ross Sorkin that SBF is ‘just spewing more lies’ and that he is yet to acknowledge his ‘culpability’ in the FTX crash. Novogratz’s criticism comes in light of a series of key blockchain and fintech leads condemning SBF’s actions and proposing solutions to mitigate the risk of this event happening again. From Coinmarketcap’s release of a Proof-Of-Reserve feature on their website to the proposal of further regulation, industry pioneers have come together to try and illustrate a future of blockchain without illicit activity.
Furthering his suspicions, Novogratz also stated that he believed SBF was not alone in his actions, alluding towards there being a collective within FTX intent on dissipating the castle of sand. ‘You don’t pull this off with just one person,’ Novogratz stated, ‘I’m not saying he even planned this all like a criminal mastermind. What they did was criminal and they need to be prosecuted for it.’. With the FTX crash having detrimented the entirety of the cryptocurrency market, Novogratz hypothesised that the crash will continue to reverberate throughout this market and the wider financial and economic markets in an unprecedented way.
ETH Rallies 6.5% In A Week
After a decimating year for Ethereum, falling from above the historic $4,500 threshold back into the mid to upper regions of the $1000 zone. Having fallen further into the depths of the aforementioned price territory in light of the really anticipated Merge, whereby Ethereum migrated from a proof-of-work (PoW) consensus mechanism to a proof-of-stake (PoS) mechanism, 2022 has been a relatively bearish year for the asset. However, across the past week Ethereum has risen by 6.5% and has traded at an average of $1,275 after climbing by an average of 18% since printing a double bottom earlier this month.
Ethereum’s bullish momentum comes in light of a rally in the traditional equities markets caused by the chairman of the US Federal Reserve, Jerome Powell, noting that further rate hikes could be a possibility in the coming months. As a result of this bullish rally, analysts have begun forecasting higher price predictions for Ethereum in comparison to those previously hypothesised. ETH bulls are expected to eye a test of the currency’s 50-day moving average at $1,335, its 100-day moving average of $1,400, and it’s 200-day moving average of $1,470.
Despite being in a long-term downtrend, this macro-optimism fuelled bullish run could begin to nudge the asset out of this territory and towards more stable signs of price recovery. However, due to Ethereum being locked into a downtrend channel that has suppressed price action since the summer, the currency will need to push above the $1,500 threshold to move above this trend channel and back into a zone of stability. Providing this occurs, Ethereum could then begin to test the September highs of $1,800 and potentially the August bullish pre-merge anticipation highs of $2,000 — thus suggesting the future for the asset could be rooted in optimism.
BTC Hashrate Continues To Plummet As Miners ‘Give Up’
The current bear market has gravely impacted currencies from across all corners of the crypto market, with Bitcoin
as no exception. Having now pushed into the upper bounds of the $16,000 territory, Bitcoin
has shed a vast portion of its values and is a mere shadow of its all-time-high witnessed late last year. With this bearishness in mind, it comes as no surprise that the Bitcoin
mining hashrate has taken a sharp plunge across the past week as miners begin to ‘give up’ as a result of low revenues, with 10% of the total hashrate being shed. The mining hashrate of the BTC network acts as an indicator that measures the total amount of computing power connected to the overall network. This means that when the value increases, the miners are bringing more machines online and that bullish sentiments are in full swing. In turn, the inverse of this signals that bearish sentiments are growing and that the price future of the asset remains speculative.
However, despite the looming bearishness, a weekly report released by Arcane Research has revealed that miner capitulation may not have such a detrimental impact on valuation as it has in previous bear cycles. Having hit an all-time-high earlier this year, the BTC mining hashrate acceleration has exacerbated issues related to revenue, as with the new highs being reached, the individual revenue for miners has significantly shrunk. This comes in light of block rewards being fixed and shared among miners, meaning that the more miners, the smaller everyone’s share of the revenue pool becomes.
With miners coming under heavy stresses as a result of the bear market, many are forced to sell their BTC reserves or migrate them across a variety of wallets. Considering such miner capitulations have historically resulted in vast crashes of BTC’s valuation (take the plummet of November 2018 for example), this could signal that an uncertain future lies ahead for BTC’s valuation. Yet, reflecting on the Arcane Research report, it has been suggested that due to the market environment being fundamentally different to its state four years prior, that it is ‘unlikely’ that miners ‘giving up’ will result in significant price fluctuations.
Author: Gate.io Researcher: Matthew Webster-Dowsing
* This article represents only the views of the researcher and does not constitute any investment suggestions.
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