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How Profit And Loss Supply Metrics Can Predict Bitcoin Price Rallies – Bitcoin Magazine

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As the most recent bitcoin price rally demonstrates, assessing on-chain data like bitcoin supply profit/loss metrics can be helpful for traders.
On November 10, 2021, bitcoin hit its all-time high price of $69,000, per the Bitstamp exchange rate.
It is truly an incredible event that BTC was able to climb so high, increasing the asset’s total market capitalization to $3 trillion, according to CoinGecko. But not so long ago, in June and July of this year, the situation didn't look so rosy. BTC was relatively weak, at least such an impression could have formed for many, and at some point, it even seemed that BTC could test the lower levels of $12,000 to $16,000.
And there were some other developments that may have made investors nervous at this time, like the claims of Chinese regulators, close attention from the U.S. regulators, the propensity of retail investors to continue panic selling, and so on.
But what the first cryptocurrency has taught us for sure is that price is difficult to predict. So, what should we be guided by? There are many great trading strategies out there, but today I propose analyzing bitcoin using on-chain supply metrics.
In my opinion, the supply metrics have performed well in the current rally, and I think they will continue to generate valuable signals for us, which are suitable for analysis.
Percentage of BTC supply in profit: This is the percentage of the circulating supply in profit, or in other words, the percentage of existing bitcoin for which the price during their last movement was lower than the current BTC price. Usually, when an overwhelming percentage of the total BTC supply is profitable, this means that the market is experiencing a bullish cycle or is about to see a bullish rally. The period during which coins can profit can range from several weeks to months before any noticeable bearish correction occurs in the market. The indicator is based on the UTXO value.
Percentage of BTC supply in loss: This represents the absolute amount of bitcoin in a given network currently in loss (i.e., when they were last moved, their price was higher than the current BTC price). This metric helps highlight market bottoms by suggesting when investors might be ready to re-enter the market. The percentage of BTC supply in loss doesn't account for the amount of loss. This metric is also based on the UTXO value.
As a basis for this method, I took the net percentage of BTC supply in profit/loss metrics. I applied an additional setting in the form of a 21-day simple moving average to avoid the display's sawtooth effect and analyze it more conveniently. Anyone can make identical data settings in an account of a blockchain data provider such as Glassnode, CryptoQuant, etc.
After configuring the indicator, it is necessary to apply the technical analysis method, specifically, the trend lines. By the way, I have hardly ever seen traders start using trend lines on the on-chain data. In my opinion, this is a significant oversight, as we can get very effective signals by doing so.
When the profitable supply is consistently in a range between 90% and 99%, it means that BTC tends to start parabolic growth. When a profitable supply curve breaks down its trend lines (marked with light gray circles), it suggests that bitcoin has completed its global or local growth and will soon move to a decline.
Most often, the maximum price of bitcoin and the moment when the supply curve breaks through its support differs by several days. There are also times when the profitable supply curve rises to levels close to 90% to 99% and doesn't stay there for a long time, after which the trend line is broken, and the BTC price begins to drop.
You can check the chart below:
Source: CryptoQuant
On the example of unprofitable supply, one can see that the significant level for losses is 50%. The supply curve is practically never higher and doesn't have periods of bright consolidation.
The supply-in-loss metric (on a 21-day moving average) allows us to state surrender zones in which signals to buy BTC are generated (light gray circles). The method of using trend lines is identical to the above example with profitable supply. It should be noted in an example dated July 29, 2021, where the metric's value didn't reach the required level of about 50%. There, what I call the "intersection" of the curves of profitable and unprofitable supply occurred, which provided the buy signal because of traders' capitulation.
Source: CryptoQuant
The application of this method seems to be useful not only for long-term analysis but is also excellent for short-term and medium-term analysis as well.
From time to time, in the vastness of the cryptocurrency community, I come across the opinion that the percentage of BTC supply in profit being over 90% is a bearish factor. I understand why some people can have such an opinion, but it is not entirely true.
To know whether a profitable supply is bullish, we need to compare it with BTC exchange reserves, as well as inflow/outflow (NetFlow). This method is more suitable for medium- to long-term understanding of bitcoin price action.
The conditions of the bullish model are as follows:
The chart below shows a couple of such examples (white rectangles areas), where all the conditions for a bull run are met.
Source: CryptoQuant
In all other cases, when there is no significant outflow of BTC, or even if there is an inflow of different strengths, and the growing reserves of BTC on the cryptocurrency exchange is seeing a simultaneous increase in unprofitable supply, this indicates a bearish mood of traders. After that, trader capitulation often happens (indicated by light yellow circles below), demonstrating the reaching of a local or global bottom.
Source: CryptoQuant
In conclusion, I would like to say that until now, many professional traders and newbies in the cryptocurrency world keep ignoring the value of blockchain (on-chain) data. It seems that on-chain data (primarily related to supply metrics) deserves more attention and deeper study, since this data has performed well in the current bull rally. I think these metrics will continue to show themselves to be valuable in this way.
This is a guest post by Baro Virtual. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

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Can I Buy Cryptocurrency With A Credit Card? – Forbes

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Updated: Jul 27, 2021, 9:00am
Like gold in the 1850s and .com stocks in the 1990s, it seems everyone is trying to get their hands on crypto. Purchasing cryptocurrency with a credit card is possible but can be a dangerous undertaking. Cardholders can expect fees from both sides of a transaction involving cryptocurrencies and credit cards, plus face the potential to lose money quickly due to volatile currency values and high interest rates.
We’ve combed through the leading exchange offerings, and reams of data, to determine the best crypto exchanges.
It’s best to check with a credit card issuer to find out whether it allows cardholders to purchase any type of cryptocurrency. American Express currently allows such transactions with a few strict terms. Bank of America recently changed its tune in 2020 when a Reddit user shared an image of a letter they received that stated cryptocurrency purchases would be treated as cash advances. (Note: Bank of America’s terms on this are still unclear.)
In addition to double-checking with a credit card company, crypto holders should also look for a cryptocurrency exchange willing to accept credit cards for deposits or purchases. Some only allow direct deposits from banks, cash deposits or debit card purchases. Coinmama, CEX.io and Paxful are all exchanges currently accepting credit cards.
Limitations also exist as to what types of credit cards are accepted by exchanges. Some exchanges may only take Visa or Mastercard credit cards. Paxful, for example, has a variety of Bitcoin vendors from around the world who sell on the exchange website. It’s one of the few exchanges currently accepting American Express credit cards, but acceptance on the exchange also greatly depends on the selected vendor.
Major U.S. credit card companies may not allow cardholders to purchase cryptocurrency with a credit card. Citibank, for example, blocked cardholders from using credit cards to purchase Bitcoin and other cryptocurrencies in 2018 fearing its volatility and the potential for fraud. Some credit card companies may even issue cash advance fees if a cardholder attempts to make a crypto purchase.
Note that some major U.S. credit card companies don’t make information on their websites easy to find regarding whether or not they allow cardholders to purchase cryptocurrencies. It’s best to call the number on the back of the card and speak to a representative. Ask clearly, directly and specifically whether or not purchasing crypto is allowed, and, if so, what types of fees will be incurred.
Some cryptocurrency exchanges don’t accept credit cards as payment, such as eToro and Coinbase.
Cardholders can expect to pay fees to both the exchange the currency is purchased with and the credit card issuer. Before making any purchases with an authorized credit card, research the exact cost for each purchase and what the monetary benefit will be (or will not be) before incurring the charge.
The exchange may charge a commission fee and/or a service fee for using a credit card to purchase or deposit crypto. For example, CEX.io is an exchange offering a handful of cryptocurrencies for purchase, including Bitcoin. Users are allowed to purchase crypto using a Visa or Mastercard credit card, but U.S. cardholders are subject to a 2.99% commission fee with a minimum purchase of $20.
Depending on the exchange, vendors within the exchange may also design fees for purchasers depending on a few factors, like where the vendor is located, the purchase amount and what type of credit card is used.
Some credit card companies allowing cardholders to make crypto purchases treat the purchases as a cash advance (cash advances usually refers to when a cardholder uses a credit card to withdraw money from an ATM). This has several disadvantages.
Let’s use common card terms as an example for the types of fees a cardholder can incur:
Other credit card risks may include:
As the cryptocurrency market evolves, so does the standard financial market. There are a few start-up credit card issuers who offer Bitcoin or other cryptocurrencies as bonuses or rewards. For example, BlockFi, a younger card company, offers 1.5% Bitcoin rewards for every purchase made. They also boast Bitcoin welcome bonuses and more rewards from trading and client referrals.
Using a credit card to purchase cryptocurrency won’t make sense for most. Cardholders should consider the major disadvantages before deciding to buy crypto using a method involving a credit card. Purchasing crypto is often best accomplished using direct deposits, debit cards or wire transfers.
Credit card purchases often come with high fees that lessen the value in a good investment or reduce returns by a significant margin. Cardholders also face a high risk of burrowing themselves into deep debt that can be hard to come out of. For those who insist on using a credit card, we advise contacting a credit card representative to discuss what the repercussions will be with a specific credit card issuer and look for a cryptocurrency exchange with the best credit card rates.
We’ve combed through the leading exchange offerings, and reams of data, to determine the best crypto exchanges.
Chauncey grew up on a farm in rural northern California. At 18 he ran away and saw the world with a backpack and a credit card, discovering that the true value of any point or mile is the experience it facilitates. He remains most at home on a tractor, but has learned that opportunity is where he finds it and discomfort is more interesting than complacency.
Dia Adams is a noted family travel expert and a real-life Mom of two teens in the DC Metro area. She has visited over 45 countries and lived in Thailand, China, and Ireland (where her son was born). Her kids have over 20 stamps in their own passports. Her passion lies in showing families how to travel more while keeping their savings and sanity. Her guidebook, Disney World Hacks, is a bestseller on Amazon.

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NFTs and DeFi overturn a banker's generational curse of poverty in 2 years – Cointelegraph

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Here's Why I Still Won't Buy Bitcoin, and You Shouldn't, Either – The Motley Fool

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Returns as of 01/22/2022
Returns as of 01/22/2022
Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services.
In less than a week, investors can pop the champagne corks and celebrate another successful year. Through Dec. 22, the widely followed S&P 500 was higher by 25%, which more than doubles up its average annual total return of around 11%, including dividends, since the beginning of 1980.
But it’s the cryptocurrency space that’s delivered the juiciest gains of all. Since the year began, the aggregate value of all digital currencies came close to tripling. Not surprisingly, Bitcoin (CRYPTO:BTC) has been one of the biggest contributors to this nominal value increase, with a year-to-date gain of 67%. It accounts for 40.5% of the entire $2.27 trillion cryptocurrency market.
Image source: Getty Images.
Bitcoin’s gains, which recently reached as high as 8,000,000,000% from where it began trading in early July 2010, have come on the heels of numerous catalysts.
To begin with, Bitcoin’s first-mover advantage has made it the most-popular cryptocurrency with retailers. As of late 2020, small-business financing platform Fundera estimated that 15,174 businesses worldwide accepted Bitcoin as payment — and this figure has assuredly grown since.
To build on the above point, Bitcoin was also recognized by El Salvador as legal tender in September. It’s the first country to allow Bitcoin to be used as accepted currency, and could pave a path for other nations to follow.
The world’s most valuable digital currency has benefited from rapidly rising inflation in the U.S. and abroad as well. Since Bitcoin has a perceived cap of 21 million tokens, it’s viewed as an inflationary hedge against a rapidly growing U.S. money supply and price hikes. In November, the Consumer Price Index for All Urban Consumers jumped 6.8% in the U.S., marking the biggest year-over-year jump in 39 years.
Investors look to be clearly excited about the upgrade potential for Bitcoin, too. In November, the long-awaited Taproot upgrade took effect. Taproot allows for smart-contract transactions to occur on the network, which opens the door for a broader use of the Bitcoin blockchain. Smart contracts are protocols that help to verify, enforce, and facilitate a contract between two parties.
Lastly, even the fear of missing out (or FOMO) has played a role. After watching Bitcoin gain 8 billion percent, crypto investors appear to be more than willing to overlook any threat of a reversion.
Image source: Getty Images.
Although Bitcoin has proved me wrong over the past year, I still wouldn’t buy the most-popular digital currency on the planet with free money — and I’d suggest others avoid it, too. Below are some of the reasons I simply can’t buy into the hype surrounding Bitcoin.
For starters, it isn’t the scarce token it’s made out to be. Take gold as a comparison. Since we can’t use alchemy to make any additional gold, what remains in the ground and what’s been already mined is all there will ever be. In terms of physical scarcity, that’s a true line in the sand. As for Bitcoin, lines of code are what limit its “cap” of 21 million coins. Even though consensus is unlikely to increase the number of outstanding tokens above 21 million, it’s not impossible that it happens. Thus, Bitcoin only offers the perception of scarcity and not true scarcity.
Another big issue for Bitcoin is dilution. But I’m not talking about the modest coin inflation that comes with cryptocurrency mining. Rather, I’m alluding to Bitcoin being a first-generation blockchain network that’s being left in the dust by third-generation blockchain innovation. There’s absolutely no reason for Bitcoin to be worth $913 billion when blockchain projects at a fraction of its value can scale better, process faster, and handle far more complex transactions. Bitcoin may be benefiting from a first-mover advantage, but the first to the foray is rarely the victor.
Image source: Getty Images.
History provides yet another reason I want nothing to do with Bitcoin. Major price swings are somewhat commonplace in the crypto space, and reversions following huge gains happen often. Bitcoin was up 8 billion percent at one point since July 2010 and has yet to demonstrate that it truly has staying power. Since it’s been unable to decouple from the stock market, I would be betting on a significant reversion following its pandemic-low bounce.
To build on this previous point, there now are considerably more avenues to bet against Bitcoin than there have ever been. The rise of Bitcoin-focused exchange-traded funds and Bitcoin futures offers a safer way for big-money players to bet on downside in the world’s most-popular crypto. In other words, Bitcoin becoming more mainstream as an investment will hurt more than help.
And finally, history also tells us that investors have a really poor track record of estimating the adoption of next-big-thing technologies. Looking back on the internet, business-to-business commerce, genomics, 3D printing, and so many next-big-thing advancements reveals that their adoption took far longer than expected. This isn’t to say that blockchain can’t become a mainstream technology in payment and nonfinancial applications at some point in the future. But it’s important to recognize that businesses aren’t willing to jump at the chance to use blockchain until it’s been thoroughly vetted in the real world. We’re just not anywhere close to that yet.
There are plenty of cryptocurrency projects that are really intriguing and could change the course of payment processing or supply chain management. Bitcoin just isn’t one of them.

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