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Bulls Beware: Maximum Pain Scenario Could Push Bitcoin’s Price Lower in Coming Days

The crypto markets have incurred overwhelmingly bullish price action over the past several weeks that appears to have confirmed many analyst’s belief that $3,200 truly is a long-term bottom for Bitcoin (BTC). The recent price action has drastically shifted overall market sentiment, and many investors are growing increasingly bullish with each new day.

Despite this shift, one highly-respected analyst laid out what he believes is a realistic “maximum pain scenario” for Bitcoin, explaining that it may surge to above $6,000 before incurring significant selling pressure that pushes it lower.

Bitcoin (BTC) Solidifies Position in $5,300 Range 

At the time of writing, Bitcoin is trading up less than 1% at its current price of $5,330, up from 24-hour lows of $5,260.

After incurring some light selling pressure during this past Sunday, Bitcoin has been able to continue climbing higher and appears to have firmly solidified its position in the $5,300 region, just slightly below its historically established resistance level that is exists at $5,400.

Over a one-week period, BTC is up significantly from its lows of $5,020, which were set last Monday. The cryptocurrency is currently trading just a hair below its seven-day highs of roughly $5,360, which were set earlier today.

UB, a popular cryptocurrency analyst on Twitter, shared his thoughts on Bitcoin’s current price action, explaining that yesterday’s small dip could have been just what was needed to spark a small rally that would confirm his bullish sentiment.

“$BTC – I wouldn’t be surprised if yesterday was “The Dip” before testing the local highs. I’d like to see a Daily Close above $5320 to further confirm my bullish argument. If I don’t see that in the next day or two, my bearish arguments will begin to hold more weight,” he explained in a recent tweet.

Will BTC Witness a “Maximum Pain Scenario?”

Although Bitcoin may be on the edge of incurring some significantly bullish momentum, a move higher may be directly followed by a drop back into the lower $4,000 region.

Alex Krüger, an economist who focuses primarily on cryptocurrencies, explained this possibility in a recent tweet, saying that he thinks another drop to $4,000 is the most realistic “maximum pain scenario” for the cryptocurrency.

“Maximum pain scenario for $BTC: – shoot through to $6000 – rest right above $6000, luring longs in – dump back down to $4000s in 2 days – have everyone scream ‘this is The End’ – slowly move back up,” he explained.

Although BTC was just trading at $4,000 a few weeks ago, the question remains as to whether or not the recent price surge and continued upwards momentum will build enough support levels to keep the crypto above the $5,000 price level.

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Think Your Altcoin Will Beat Bitcoin ROI? Then Don’t Look at This Chart

Bitcoin dwarfs every other altcoin when it comes to return on investment (ROI) since initial exchange listing, data shows. Had you threw in just $100 bucks into BTC in 2010, you would be a millionaire today.


Bitcoin ROI Shows Why They’re Called ‘Altcoins’

A new visual graph from DataLight perfectly illustrates just how impressive Bitcoin ROI (return on investment) has been over the past decade.

Buying just $100 USD worth of Bitcoin in mid-2010 would have netted you a cool $1.3 million today. That is, if you managed to ‘hodl’ instead of ‘sodl’ your precious bits until today.

By comparison, every other cryptocurrency has been dwarfed by BTC when it comes to ROI since being first listed on an exchange.

Granted, when it comes to trading on exchanges, Bitcoin has an almost 3 year head start even on Litecoin, one of the oldest ‘altcoins’ and the first to use the Scrypt hashing algorithm. But for those banking on the ‘silver to Bitcoin’s gold’ to beat Bitcoin’s returns anytime soon may be out of luck.

Certainly, Litcoin has seen some impressive rips in recent years. However, the price of Litecoin has had a much different trajectory while being at the mercy of BTC market cycles.

For example LTC/USD peaked at around $35 in November 2013. These same price levels then repeated in July 2017….and again in January 2019. This is more reflective of speculative, pump-n-dump behavior than a (secondary) store of value.

Bitcoin, on the other hand, stands out  as it continues to post higher highs after every bubble making it the perennial leader of cryptocurrencies today.

Ethereum (ETH) 00 has been the best performing altcoin since its exchange debut in 2015. One hundred bucks into Ethereum would have netted you roughly $68,000 today at around $170 per ETH. Though, undoubtedly, this figure would be much higher at Ethereum’s all-time high of nearly $1,400 in January 2018.

Bitcoin-branded forks like Bitcoin Cash, meanwhile, have fared even worse, actually depreciating in value since their inception.

Bitcoin Apples to Altcoin Oranges

More recently, Bitcoinist highlighted the stellar performance of Binance Coin (BNB) 00, which has skyrocketed in value since launching in mid-2017. In fact, it has become the first cryptocurrency to surpass the January 2018 all-time high.

At the same time, comparing in-house digital tokens like BNB (and pretty much every other ‘alt’ with a foundation or a company behind it) to Bitcoin is like comparing apples to oranges.

In fact, every single altcoin is paired against bitcoin by default for a reason. Admittedly, some altcoins have performaned marvelously against BTC since their inception, particularly on shorter timeframes.

But as the saying goes: the faster they rise, the faster they fall.

That’s because their low market caps on exchanges are both a weakess and a strength. In bull-markets, for example, a lower cap means a coin can be pumped much easier allowing it to outpace the gains of high cap cryptocurrencies like Bitcoin.

On longer timeframes, however, the story repeats over and over again as Bitcoin demonstrates who’s king.

#REKT? Not With Bitcoin! Yearly ROI On Largest Cryptocurrency Still Tops 150%

Think Your Favorite Altcoin Can Beat BTC? Good Luck.

Therefore, it is no surprise that Bitcoin, being a truly leaderless, decentralized and open-source cryptocurrency, has attracted the most network effect and hashing power to be the most secure blockchain today.

Subsequently, this give investor confidence more confidence in Bitcoin above all. It also means that it’s the de facto choice for trustlessly transferring value over any other cryptocurrency regardless of fees.

It’s also no coincidence that the SEC is considering approving a Bitcoin ETF only. It’s why Bitcoin trading instruments have been the first to hit traditional markets; and why investors are increasingly calling it ‘irresponsible’ not to have exposure to BTC in 2019.

In fact, data has shown that allocating only 1 percent of one’s portfolio to bitcoin historically outperforms the S&P 500, gold and US Treasury bonds.

But, more importantly, it also highlights the possibility of a Lindy effect, suggesting that the ‘internet of money’ could be a zero sum game. If so, then betting on ‘the next bitcoin’ looks more like gambling. Whereas bitcoin is increasingly becoming the safer play and one of the best investment opportunities in generations.

As InterchangeHQ cofounder, Dan Hedl says:

You think the altcoin you’re holding will beat Bitcoin’s return? Good luck.

Is investing in altcoins a good strategy compared to only bitcoin? Share your thoughts below!


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The Rundown

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Bitcoin (BTC) May Have Bottomed, But Crypto Could Still See A “Black Swan” Event

In the eyes of analysts across the board, Bitcoin (BTC) decidedly bottomed at $3,150. They cite the fact that at $3,150, BTC was down 85% from its all-time highs, which is where the crypto asset has bottomed in previous cycles, coupled with the idea that industry fundamentals are better than ever.

And so far, this call has been vindicated, as BTC now sits at a casual $5,300. However, some pundits fear that a so-called “black swan” event could still strike this market, forcing Bitcoin and other cryptocurrencies to enter a freefall. Let’s take a look.

Related Reading: Crypto Professionals Predict $2,400 Bitcoin Bottom, Expect Infrastructure To Spark Bull Run

Why Crypto Could Head Lower From Here

Adamant Capital, an Alpha-seeking Bitcoin fund, recently released its latest report about the state of cryptocurrency markets. While the report, titled “Bitcoin in Heavy Accumulation,” had bullish undertones, its authors, which includes prominent analyst Tuur Demeester, weren’t remiss to not mention the cases for lower lows in this cycle.

Adamant’s researchers and partners gave three/four cases for a collapse to new lows in the coming months.

First, hacks or failures of exchanges and other infrastructure providers. While the unwinding of the 2013 rally was partially a result of natural cycles, some of the drawdown was catalyzed by the decimation of Mt. Gox, hacked for hundreds of thousands of BTC. Adamant postulates that if a similar event occurs in the coming six months, Bitcoin markets could see a negative demand shock.

Second, a macroeconomic crash. Although cryptocurrencies have been lauded as non-correlated assets to stocks, it was proposed that a collapse in traditional markets could create a situation similar to the “2008 paradox” of the value of gold falling by 30%, even as demand surged.

Last, a “secondary Bitcoin mining capitulation.” Adamant remarks that while miners have already capitulated in this cycle already, if BTC “drifts down” to $3,000, this capitulation could be replicated as miners go out of business en-masse.

Bitcoin Looks Hopeful

More likely than not, however, Bitcoin has bottomed. As reported by NewsBTC previously, the same report showed clear signs that BTC is in accumulation.

It was explained that the Bitcoin Unrealized Profit/Loss (BUPL) indicator, which aims to estimate how much BTC holders’ are cumulatively profiting or losing, is reading at $13 billion in the positive. If the indicator is adjusted for the approximate number of lost coins, however, BUPL currently reads at $3 billion — 3% — of unrealized losses.

While this doesn’t sound all too important, as the measure is lesser-known, as Adamant explains, the recent BUPL movements confirms that Bitcoin has exited a “capitulation” phase, entering into a stage of “hope” (and fear). It is important to note that when BTC exited the “capitulation” phase during 2014 to 2016’s cycle, there was strong BUPL uptick, as we are experiencing now due to Bitcoin’s recent rally past $5,000.

What’s even more optimistic is that the 60-day volatility chart for BTC is currently sitting at 5%, a level not seen since late-2016, and even fell as low as 2% in early-November 2018. This, as Murad Mahmudov once explained, shows that a Bitcoin rally could be on the horizon.

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Bitcoin Price Volatility Soars 200% in April

Bitcoin price volatility has tripled over the past 30 days as BTC/USD has made an impressive push above the $5,000 mark. At the same time, overall volatility is actually in decline as Bitcoin adoption spreads. 


Bitcoin Price Volatility Triples in April

The volatility of bitcoin price has surged nearly 200 percent from a monthly low of 1.26 percent to 3.31 between April 1 and April 2, according to Bitvol.info. Currently, the volatility stands at 3.54 percent.

bitcoin price volatility

This occurred as BTC/USD skyrocketed by 22 percent in just the span of one hour propelling the cryptocurrency above $5,000 for the first time in 5 months.

Since the early April surge, the price has remained in a relatively tight range between $4,900 and $5400 amid bullish forecasts and other indicators possibly signaling a market bottom.

Bitcoin Volatility Decreasing With Time

The given volatility index gauges the price movement of BTC price over the past 30 days. Currently, the volatility stands at 3.54 percent, the highest in 3 months.

Overall, bitcoin price volatility has actually been declining over the years. In fact, 2018 was one of the least volatile periods in Bitcoin’s history despite an 80 percent drop in USD value.

Last year, the volatility index remained under 4 percent for most of the year. The only exceptions being the tail-end of the January 2018 crypto market price peak and the November-December period when BTC/USD saw a steep plunge below the $6,000 mark.

bitcoin price volatility

Data from the past 8 years shows a clear downtrend in overall spot price volatility. Despite the 80+ percent changes in bitcoin price in 2018, today’s fluctuations are nothing compared to Bitcoin’s early years when the price could easily move +/- 100 percent in a single day.

No One Wants a Stable Bitcoin

One of the most common criticisms of Bitcoin is that it is too volatile. Its wild fluctuations in price, the argument goes, means it cannot be money. Because its USD equivalent value transferred can diminish (or rise) in seconds.

This concern falls flat though because this problem is solved by BTC payment processors, stablecoins and other solutions.

At the same time, fluctuations in spot price shouldn’t be too surprising as bitcoin emission doesn’t follow typical supply and demand. This is why many traders and investors actually love the chaos of bitcoin price 00 volatility. When price moves, everyone pays attention.

It is these volatile days, in particular, that have given traders the biggest returns, compared to the rest of the year. This is the time of maximum opportunity and likely why having a low time preference and ‘hodling‘ — instead of trying to time the market — has proven to be a successful strategy for many Bitcoin investors.

Volatility Boosts Bitcoin Awareness

As Bitcoinist previous reported, overall interest in bitcoin also lags behind price moves. Google search trends over the past month reveal that the phrase “buy Bitcoin” spiked a day after the price surge caught everyone off guard.

As price moves (in either direction), people want to know why. What is Bitcoin? Should they buy now? Should they sell? Why is it rising so fast?

Moreover, virtually everything in the cryptocurrency space mirrors the bitcoin price chart. From website traffic to trading volume, to the number of headlines seen in the press.

Admittedly, the majority of the public is all about ‘when moon?’ and not ‘in it for the technology.’

Unsurprisingly, greed and fear drive the market. Luckily, humans have the ability to learn from experiences.

Educating yourself about what bitcoin is, why it was created, and historic market cycles could spare you the FOMO (fear of missing out) next time around. It could also help prepare for the next spout of bitcoin price volatility and avoid buying high and selling low.

In the meantime, all eyes will be glued to the price of bitcoin as traders wait to catch the next wave.

Is the return of Bitcoin volatility another bullish sign for BTC price? Share your thoughts below!


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The Rundown

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Binance CFO Talks About His ‘Exciting’ Journey in Exclusive Interview

It was the last hour of the final day at Paris Blockchain Week Summit. The charismatic Binance CFO Wei Zhao had been speaking back to back. Yet, despite the time and the fact that he must have repeated himself over and over for two solid days, he seemed undeterred. Wearing jeans and a Binance hoodie, he bounded up to meet me, vigorously shaking my hand, clearly enjoying being the man of the moment.


If this were a celebrity party, Binance would be the VIP guest. Changpeng Zhao (CZ)’s creation seems unstoppable. Every project wants to be on Binance, from regular token listings to holding IEOs on the Binance LaunchPad. The Binance Chain has just launched, its native BNB token is climbing in price, and the company has the power to influence the entire community and delist tokens at will.

Binance Won’t Be Leaving Malta Any Time Soon

Minister for Digital Affairs Cedric O later said in a press conference that one of their goals was attracting Binance to France. Yet Zhao confessed to me that he had no idea the French had pushed forward new regulation until now.

With a rather high taxation rate for crypto companies at 30 percent, regulations around ICOs (that no one’s doing anymore) and a lot less flexibility than Malta, it looks unlikely that Binance will move to France anytime soon. Although I wasn’t privy to any backroom chats.

binance cfo wei zhao

My interview was with Wei Zhao, the man partially responsible for Binance’s epic growth. “I help companies to scale and to grow,” he tells me. Binance now has over 400 people in 30 countries. That’s “a decent sized organization.”

One thing that I have helped to launch is our fiat to crypto offering. In January, we launched our fiat to crypto, pound to BTC. We’re also doing Singapore. Last year, we launched in Uganda… My approach has been basically to build up our presence in the regulated world and build up more fiat.

Bridging the Traditional Financial World with Crypto

With a background of working in traditional finance, and grooming companies to go public, it’s unsurprising that another major focus of Zhao is institutional investors.

“I worked in Hong Kong, so I’ve been CFO for about four different companies, two of which went public. So, I am quite adept in dealing with bankers, and working with bankers, I am a banker myself. I helped to launch our OTC trading services, Binance off-exchange services. I help bring people from traditional bond traders and that type of trader to cryptocurrency.”

Indeed, the surge in Binance’s OTC trading drove the company’s near $80 million first-quarter profits.

What It’s Like Working at Binance

I ask why he made the leap from traditional finance to crypto. He says he would not have done it for any other company than Binance.

I think we are really different from other companies. Most are just exchanges, but we really fiercely want to make an impact in the world… The journey has been awesome so far and I’m in it for the long haul.

One of the best things about his job? Traveling to different places. “I flew around the world four or five times already,” he laughs.

It does speak to the borderless nature of cryptocurrencies. Yes, it’s a digital business but at the end of the day, it’s still a human business, it’s a very human business. The reason this industry is growing so much is that people in this industry travel so much. Like 10 times more than in any other industry.

There’s nothing like human interaction, face to face human talking about things, that’s how you can really impact change.

Does the Recent Leap in Bitcoin Mean the Bear Market Is Over?

It’s not a decisive “yes” when I ask if the bear market is over. Zhao pauses and leans back in his chair. There’s a short silence before he forms his answer, leading me to believe the opposite may be true. But with the most profitable exchange in crypto, bear market or no, nothing’s stopping Binance. He says:

I think there’s generally a lot more interest across the board despite adverse regulation and other adversities. You see general interest in bitcoin from traditional industries, and the rest of the world is showing interest in projects and I think all of it will contribute to the continued growth of the market. The fact that people are thinking “how is this going to impact my business?” Facebook JPMorgan… it lends credibility to the space.

I ask if companies like JPMorgan and Facebook lending “credibility” is rather ironic, considering how Bitcoin was born. He replies:

You need a push which is driven by guys like Facebook and JPMorgan, that gets people thinking about how that’s going to impact institutions and the market. It lends credibility, mindshare, and shows that our actions are getting noticed, that’s what it takes.

What It’s Like Working with CZ

So, what’s it like working with one of crypto’s biggest personalities? “Awesome, it really is awesome!” he enthuses, “he’s extremely transparent, diligent and extremely honest, he’s also extremely intelligent, and very patient.”

changpeng zhao cz binance

I ask if he was in complete agreement about the recent delisting of Bitcoin SV, to which he nods his head. Presumably, he’s been fielding questions on the subject all day long and his answer is extremely diplomatic.

“We have a very rigorous delisting process, and we also have a regular quarterly review. This quarter a lot of the comments we’ve written out our rationality… I don’t have any other comments on that.”

Finally then, who does Zhao believe that Satoshi Nakamoto is? Clearly, not Craig Wright.

“I think its a community,” he replies. “It’s like ‘I am Bitcoin’, you know that movie? ‘I am bah, blah blah’? It’s like that with Bitcoin. It’s a community. And we’re surviving… I believe that every day that you survive extends your survival… There is a reason why he or she wants to remain anonymous, because it’s not important, it’s a community.”

What do you think of Zhao’s comments? Let us know your thoughts below!


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The Rundown