Cryptosquawk

Weekly market analysis of cryptocurrencies

We report the traditional weekly crypto market analysis based on the contribution by Aayush Jindal (Cryptonews.com). The analysis was made on May 1.

After a successful close above $8,000, bitcoin price gained bullish momentum. The BTCUSD surged around 20% and broke many resistances near 9,000. It even traded above the 9,200 resistance and tested the 9,500 hurdle.
On the downside: the price is correcting gains and it could retest the 9,050 and 9,000 support levels.
On the upside: the price is likely to face a strong selling interest near 9,450 and 9,500. If there is another show of strength, the price could surge towards 10,000.

Ethereum price extended its rally above the $205 and $220 resistance levels. The ETHUSD even surpassed 225 and traded close to 228. It is correcting lower and approaching the 220 support.
On the downside: if there are more losses, the price may perhaps test the 212 support.
On the upside: the 225, 228 and 230 levels are key hurdles. A successful break above 230 might lead the price towards 250.

Bitcoin cash price gained more than 10% and it broke the $245 and $250 resistance levels. The BCHUSD even climbed above 265 and tested the 275 zone. It is currently correcting lower to 265, below which the bears are likely to aim a test of 250.

Litecoin succeeded in gaining traction above the $46.5 and $48.5 resistance levels. The LTCUSD tagged the 50.0 barrier and it is currently correcting lower. On the downside, 48.5 is likely to act as a strong support. On the upside, the 50.0 and 50.5 are short term hurdles, followed by 52.0.

XRP price extended its rise above the $0.212 and $0.220 resistance levels. The price even climbed above 0.232 and tested the 0.235 resistance. The price is retreating lower and it seems like it could test the 0.224 support zone.

In the past three sessions, many smaller altcoins rallied more than +10.0%, including DATA, SC, OMG, HYN, MONA, BCD, CKB, OKB, NRG, CRO, BSV, BCN, MAID, BTG, BTT, and FTT. Out of these, DATA rallied +54.0%.

New mining difficulty record cancelled right before Bitcoin halving

Sead Fadilpašić (Cryptonews.com) reports the market sentiment on the next Bitcoin halving. He writes that “four days before the next Bitcoin mining difficulty adjustment, the previously estimated all-time high is nowhere in sight. Not only will there not be a new record, but along with the falling hashrate, the difficulty is now expected to drop.

Major Bitcoin mining pool BTC.com’s latest estimation is that after two consecutive increases the difficulty will correct lower by 0.64% on May 5 to 15.86 T.

Ten days ago, it was estimated that Bitcoin difficulty adjustment, which is a measure showing how hard it is to compete for mining rewards, would reach a new all-time high during the next difficulty adjustment. As a reminder, the difficulty back on April 21 reached its biggest rise in six months, going up 8.45% to 15.96 T. Back then, the estimates were that it would rise more than 8% again to 17.29 T.

But now, just four days away from that next adjustment, this no longer appears to be the case and is unlikely to happen, especially when taking into account the the fact that hashrate, the computational power of the Bitcoin network, is dropping as well – now standing at 111.17 EH/s.

Also, it is the last adjustment before the Bitcoin minig reward halving event, expected to happen on May 12. Therefore, lower mining difficulty would somewhat help compensate for the loss of a substantial share of the mining revenue.

At the same time, the price of BTC has been increasing over the course of the past week and even month making mining more profitable. The price went up +42.0% on a monthly basis and +65.0% on a yearly basis.

Meanwhile, a month ago, analysts at major crypto exchange Kraken warned investors to keep an eye out on the possible miner capitulation, despite April being historically been the second-best performing month for Bitcoin. The analysts explained that higher BTC prices are a must for miners to stay in business, and that even sideways price action could be enough to push the unprofitable miners out of the market. This dynamic will be worsened by the halving should price fail to trend higher, they said.”

Does the digital dollars give the State too much control over money?

We report the contribution written by Max Raskin, an adjunct professor of law at New York University, on the risk linked to the adoption of the digital dollar in the United States, currently a hot topic in the US politics.

“A bipartisan group of U.S. congressmen wrote Treasury Secretary Steven Mnuchin last week, urging him to consider the use of blockchain technology in administering the federal government’s coronavirus response.

This comes just a month after Democrats in the House and Senate proposed bills that would allow individuals to hold checking accounts directly with Federal Reserve banks. Such accounts have been referred to as “digital dollars,” and such plans aim to both stimulate the economy with direct cash injections and bank the unbanked.

Although this may seem like a sleek new idea riding the crest of enthusiasm over blockchains, digital currency and financial inclusion, a similar proposal, dubbed the “Chicago Plan,” was considered by President Franklin Roosevelt during the Great Depression of the 1930s and ultimately rejected.

Then, like now, the plan is not without benefits. But then, like now, it should be rejected because it would be one of the biggest power grabs in American history, politicizing our system of finance irrevocably.

It is important to acknowledge that there is a kernel of truth to the digital dollar plan. Right now private banks act as middlemen between depositors and the government. These middlemen take fees for this role. And it is true some individuals do not have enough savings to participate in, or have confidence in, the private banking system. A digital dollar system would allow the government to subsidize the unbanked as well as directly target countercyclical monetary stimulus and even enact non-discretionary monetary rules. But the temptation and fraught incentives created are simply too great to justify such marginal benefits.

In cutting out the middlemen, this plan cuts out all that stands between our bank accounts and the Washington Leviathan. It sounds nice to be able to directly target cash injections into, let’s say, all small restaurant owners’ accounts. But a government that gives can also take.

What if an administration decided to inject money directly and seamlessly into your competitor’s bank account? Imagine Republicans targeting clean energy companies and abortion clinics or Democrats targeting gun manufacturers. Every credit or debit on your account would be subject to the ballot box or, worse, the bureaucrat. Checks on this power could certainly exist, but given our hyperpartisan environment, it is entirely possible these checks could be skirted.

Such a system also completely unshackles the government printing press from any reserve requirements – perhaps to effect negative interest rates. That would allow the government to impose, say, negative rates only in certain politically disfavored geographies.

It is true that digital dollar accounts, like private checking accounts, would be insured by the FDIC. But this should be cold comfort to Americans facing the specter of hyperinflation if such insurance was ever actually needed. It is true that, as a lender-of-last-resort, the Fed cannot, by definition, default. But neither can private banks if the Fed provides them with liquidity. Either way, if the economy is getting to a point where such a scenario is possible, people would just lose confidence in the Fed rather than individual banks – another problem of centralization.

The United States was founded with a deep skepticism, both principled and practical, of centralized authority. In crafting our system of federalism, our Founders knew it was better to have competition even if it meant forgoing the possibility of Nirvana. We now have financial federalism where banks are able to compete with one another to provide the best services. A national bank with virtually limitless power and resources is a huge deterrent to the free market and an even larger temptation to autocrats.

Power is tempting. The thought of a “Crypto Czar” with a bevy of new bureaus and fancy titles is sure to appeal to both Republicans and Democrats wanting to enact their own visions of the digital dollar. But power should never be an end in itself. Although it may seem messy, the market economy produces a robust, ordered system capable of reacting to even the deadliest of viruses in a way that efficiently allocates society’s scarce resources.”

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