Bitcoin Prepares Short Squeeze, Cardano Update, and MicroStrategy Has “Loss” of $147 Million with Crypto
Investors are starting to get more optimistic and $40,000 resistance could be broken at any time, analysts point out.
The historic highs of the month of February have been confirmed so far amid a greater appetite for risk from investors, which makes Bitcoin (BTC) stabilize well above the low of about $ 33,000 seen in January. At 7am, the cryptocurrency was trading at $38,559, close to stability on the day, but with accumulated gains of 4.3% in a week.
Among analysts, the thesis is gaining strength that the Federal Reserve’s monetary tightening is finally being digested and that the digital asset could break the barrier of US$ 40 thousand at any moment. As a result, the chances of a short squeeze in the futures market increase, which occurs when the price of an asset suddenly rises and leads to the liquidation of short positions (which bet on the fall).
The Fear and Greed Index, which measures market sentiment, rose from “extreme fear” territory last week, a sign that the moment of heightened pessimism is starting to pass. The index is now close to the July 2020 lows, which preceded a strong cryptocurrency price rally.
“On Sunday, the index briefly hit 30 – the highest level in 2022,” analysts Arcane Research wrote in a report on Tuesday. Still, some analysts prefer to see an increase in trading volume to confirm a shift in sentiment from pessimism to optimism.
Volatility can be driven precisely by the moment of low trading volume – the lower the volume, the greater the space for sudden price changes. The scenario stems mainly from the lack of activity in Asia, the exchanges of China, Hong Kong, South Korea and Singapore closed this week for the Chinese New Year holiday.
For Arcane, a jump beyond $40,000 should bring traders back. “Bitcoin is currently struggling against the $40K resistance and if it manages to break it, we could see a burst of volume similar to when it dropped below that level,” the report pointed out.
In a note, trading firm QCP Capital also pointed out that “a short-term setup [is] brewing for a bounce, especially at a close above $40k for Bitcoin and $3k for Ethereum in February. ”.
According to blockchain analytics firm Santiment, 40,785 bitcoins left exchanges last week, recording the biggest BTC outflow since September. “The ongoing trend of coins moving to cold wallets [disconnected from the Internet] is historically good for long-term price movements,” Santiment said via Twitter.
A near-term rally could ease the pressure on publicly traded companies that acquired Bitcoin as a treasury strategy. MicroStrategy, which has the largest Bitcoin treasury, with more than 125,000 BTC, recorded a $147 million reduction in the asset’s book balance on the Q4 2021 balance sheet due to the cryptocurrency’s depreciation.
MicroStrategy reports $147 million “loss” from Bitcoin depreciation
MicroStrategy reported a cost related to the depreciation of non-cash digital assets of $146.6 million in the fourth quarter of 2021, up from $65.2 million in the previous quarter, according to the company’s latest balance sheet.
The loss reflects the decline in the price of Bitcoin from the price at which the cryptocurrency was acquired. According to US accounting rules, the value of digital assets, which includes cryptocurrencies, must be recorded at their cost and adjusted only if their value decreases. If the price goes up, the gain can only appear on the balance sheet after the asset is sold.
In 2021, MicroStrategy recorded total losses of $831 million on digital assets, up from $71 million in 2020.
The company’s 124,391 bitcoins held at the end of December 31, 2021 were acquired for $3.752 billion, reflecting an average cost per Bitcoin of approximately $30,159, the company said.
MicroStrategy reported yesterday morning that it purchased approximately 660 additional bitcoins for around $25 million between December 30, 2021 and January 31, 2022. This gives the company a total of 125,051 bitcoins, valued at around $4. .8 billion at today’s price.
Amid the controversy, Cardano proposes updating the network
Input Output, the development company behind Cardano ([active-ADA]), proposed this Wednesday (2) an update aimed at increasing the block size of the network by 11%.
“We proposed the next parameter update as we continue to increase the capacity of the Cardano network according to plan. The proposal will increase the block size by another 8KB from 72KB to 80KB,” Input Output said via Twitter.
Blocks are batches of transactions confirmed and recorded on a blockchain. Larger sizes mean more transactions can be included in each batch, but they can also affect transaction time and overall network capacity.
In a second proposal, the developers suggested increasing the performance of the Plutus smart contract platform. If implemented, the change would increase the amount of data that can be included in a single transaction from 12.5 million to 14 million.
The proposals are in line with a broader plan to increase transactional volumes on the Cardano network as it moves towards becoming a blockchain focused on decentralized finance (DeFi).
Recently, two DeFi projects that run on the Cardano network clashed and opened up the difficulties faced by the project to create an ecosystem of solutions capable of rivaling Ethereum.
Cryptocurrency donations to incognito browser Tor soar 841% in 2021
Cryptocurrency donations to the anonymous browser Tor increased by 841% in 2021 compared to the previous year, according to the non-profit organization The Tor Project, which is responsible for the project.
Of the $940,000 raised last year, 58% of donations were in cryptocurrencies. The much higher percentage compared to 2020 when donors sent $58K worth of cryptocurrencies.
“It is clear that cryptocurrency users are extremely philanthropic and care deeply about online privacy,” Tor Project fundraising director Al Smith told CoinDesk.
Of the cryptocurrency donations, 68% ($371k) were in Bitcoin, 28% ($154k) in Ethereum, 2% ($9k) in DAI and 1% ($7k) in Monero, a privacy-focused cryptocurrency.