Bitcoin Tumbles Below $50,000 as Fear Sweeps Through Crypto

Bitcoin Tumbles Below $50,000 as Fear Sweeps Through Crypto

Bloomberg

(Bloomberg) – Now that the lights are back on in Texas, the state has to figure out who’s going to pay for the energy crisis that plunged millions into darkness last week. It will likely be ordinary Texans.The price tag so far: $50.6 billion, the cost of electricity sold from early Monday, when the blackouts began, to Friday morning, according to BloombergNEF estimates. That compares with $4.2 billion for the prior week.Some of those costs have already fallen onto consumers as electricity customers exposed to wholesale prices wracked up power bills as high as $8,000 last week. Other customers won’t know what they’re in for until they receive their gas and power bills at the end of the month. Ultimately, the financial pain will probably be shared by ratepayers and taxpayers alike, said Michael Webber, a professor at the University of Texas at Austin and chief science officer for French power company Engie SA.If prior U.S. power market failures are any guide, Texans could be on the hook for decades. Californians, for example, have spent about 20 years paying for the 2000-2001 Enron-era power crisis, via surcharges on utility bills.CPS Energy, which is owned and run by the city of San Antonio, said on Twitter it was looking into ways to spread costs for the last week over the next 10 years. That didn’t sit well with its customers, who railed against the company’s proposal during a board meeting on Monday.“Spreading the cost of this event over a decade is unacceptable,” said Aaron Arguello, an organizer with Move Texas. “Customers are already in debt with student loans, mortgages and other payments.”But companies that ran up huge losses as the cost of electricity skyrocketed last week will inevitably try to recoup those through their customers, taxpayers or bonds. How quickly Texans pay depends on who their provider is.Gas utilities usually pass the costs onto customers at the end of the monthly billing cycle, said Toby Shea, a senior credit officer at Moody’s Investors Service. Municipal utilities, co-ops and regulated power providers have the ability to spread out costs over a longer time-frame. “It’s very easy for a government to spread this out for many years and even a few months,” he said.CPS Chief Executive Officer Paula Gold-Williams said last week the company may also issue bonds to help pay for the natural gas it bought at inflated prices.Some utilities are looking to secure hundreds of millions of dollars in liquidity to spread out costs for 10 to 20 years, said Scott Sagen, an associate director in U.S. public finance at S&P Global Ratings. Rayburn Country Electric Cooperative Inc., for example, has fully drawn its $250 million syndicated line of credit and has recently entered into a $300 million bilateral line of credit with National Rural Utilities Cooperative Finance Corp. for one year, according to an S&P report published Monday.A number of utilities are in talks with their banks to get liquidity to pay off their current debts so they can then take out a bridge loan that they’ll convert to long-term bonds. “They’re trying to smooth out these costs as much as possible and provide cover for their customers,” Sagen said.But small retailers who tend to be more thinly capitalized and less robustly hedged have limited options. One such company, Griddy, said last week it would challenge the prices set by the grid operator during the crisis, in an apparent bid to recoup losses for itself and its customers. Another company, Octopus Energy, said Monday it would forgive any energy bill in excess of the average price of electricity for the week, and eat the resulting losses which could be millions of dollars.The state’s utility regulator on Sunday blocked power sellers from disconnecting customers for non-payment, saying the governor and lawmakers need time to come up with a plan to address sky-high bills, first. Texas lawmakers will likely take up the discussion of consumer relief as part of their committee hearings on the crisis which will begin this week, a spokesman for the Public Utility Commission of Texas said.In theory, the legislature could pass an emergency bill that could cover the excessive costs charged by generators during the crisis, said Julie Cohn, an energy historian with affiliations at Rice University’s Center for Energy Studies and the University of Houston’s Center for Public History. “Another piece would be to say you can have a competitive power market that we have, but prohibit the provider from linking the price directly to the wholesale price, as Griddy does.”That would be easier to do in a state that takes a more heavy-handed regulatory approach to its electricity market, according to Webber. But Texas decided to take a more hands off approach with its deregulated system, he said.“The question is where is the money going to come from?” Shea said. “Will Texas go and bail out certain customers? That’s not their attitude toward how they manage their market or manage their economy.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.

Crypto market pressure valve vents? Major correction for crypto, while flash crash on Kraken sees ETH fall to $700 - CityAM

Crypto at a Glance

It may have been a weekend of landmark moments and celebration, but this week has unfortunately kicked off with Bitcoin setting the wrong kind of records. The leading cryptocurrency yesterday traded within a record-setting $10,877 range – plummeting from its all-time highs above $58,000 set over the weekend. This marks the first time it’s ever traded within a five-figure daily price range.

After a bullish week saw Bitcoin climb to almost $1 trillion market cap, Ethereum hit $2,000, and BNB hit $300, there were double-digit drops for almost all major cryptocurrencies yesterday. Ether was perhaps the worst impacted, plummeting over $500 from its weekend highs. A dramatic flash crash to $700 on Kraken even saw Ether briefly going at half price, with reports blaming the mystery event on a fat-fingered trader accidentally entering a wrong number. Let’s hope it wasn’t a prediction.

Is it traders taking profits after seeing the price of Bitcoin double this year? The market hasn’t seen a pullback this dramatic since early January and with record open interest in the futures markets and the market heavily overleveraged, a retrace was widely expected. About $1.50 billion worth of open interest was liquidated by crypto exchanges yesterday, according to tracker Bybt.com. Corrections are usually a healthy part of the process, although for many joining the space recently, it will still likely be a shock. The question now is whether this is part of a larger correction, or whether we’ll see an immediate rebound as we have with other recent drops?

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In the Markets

The Bitcoin Economy

*Definitions and insights can be found at https://bytetree.com/insights/

What bitcoin did yesterday

We closed yesterday, 22 February, 2021, at a price of $54,207.32 – down from $57,539.94 the day before.

The daily high yesterday was $57,533.39 and the daily low was $48,967.57.

This time last year, the price of bitcoin closed the day at $9,663.18. In 2019, it was $4,005.53.

As of today, buying bitcoin has been profitable for…

99.9% of all days since 2013-04-28.

Bitcoin market capitalisation

Bitcoin’s market capitalisation is currently $900,855,654,514, down from $1,050,556,365,611 yesterday. That means it is still the eighth largest asset in the world by market cap, ahead of Tencent in ninth and more than $150 billion bigger than Facebook.

Bitcoin volume

The volume traded over the last 24 hours was $98,418,440,819, up from $55,866,988,049 yesterday. High volumes can indicate that a significant price movement has stronger support and is more likely to be sustained.

Volatility

The price volatility of bitcoin over the last 30 days is 80.93%.

Fear and Greed Index

Market sentiment remains high despite yesterday’s sell off, up in Extreme Greed at 94 again.

Bitcoin’s market dominance

Bitcoin’s market dominance is currently 63.26. Its lowest ever recorded dominance was 37.09 on 8 January, 2018.

Relative Strength Index (RSI)

The daily RSI is currently 54.10. Values of 70 or above indicate that an asset is becoming overbought and may be primed for a trend reversal or experience a correction in price – an RSI reading of 30 or below indicates an oversold or undervalued condition.

Convince your Nan: Soundbite of the day

“Gold is, no pun intended, the standard if you want to measure the purchasing power over millennia. The liquidity of gold has been consistent over time. Gold is what defines the X-axis of purchasing power over time. Bitcoin, while it shares defensive qualities with gold, has the additional attribute of being aspirational. What bitcoin seems to possess is the potential to go up to multiples of a moonshot. No one thinks that gold will moonshot. Bitcoin is also finite, unlike gold. No increase in demand can change that. There is zero elasticity.”

– JP Thierot, CEO of Uphold, a digital money platform

What they said yesterday…

Still early days

The story is #bitcoin has always been two steps forward, one step back, then two steps forward. Few understand this. — Tyler Winklevoss (@tyler) February 22, 2021

You were all warned

Bitcoin down 10%. Can’t say I’m surprised tbh. I warned it was a bubble back in 2012. — Joe Weisenthal (@TheStalwart) February 22, 2021

Only because the dollar gets in the way, Janet

Yellen sounds warning about ‘extremely inefficient’ bitcoin https://t.co/BB6dyXm6zZ — CNBC (@CNBC) February 22, 2021

Don’t be like Molly, buy the dip

Why didn’t I listen to me? https://t.co/QMpi9kA5RE — Mehhhhhhhhh (@mememolly) February 23, 2021

Crypto AM Editor Writes

Markets respond after Bitcoin pierces $50,000 to reach new all-time-high

Breaking: Bitcoin smashes through $50,000

Crypto AM: Longer Reads

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Crypto AM: Tiptoe through the Crypto with Monty Munford

https://www.cityam.com/profile/crypto-am-tip-toe-through-the-crypto/

Crypto AM: Definitively DeFi

Crypto AM: Recommended Events

What’s Next for Crypto Webinar

Baker Botts & Team Blockchain

3 March 2021 17:00 GMT

https://event.on24.com/wcc/r/3025235/72862B4A2DA17F4097395FBA84B845BF

CC Forum

Global Investment in Sustainable Development

31 March – 1 April 2021 – Dubai

https://dubai.cc-forum.com

Global Technology Governance Summit

6 – 7 April 2021 – Tokyo

https://www.weforum.org/events/global-technology-governance-summit-2021

Cautionary Notes

It’s definitely tempting to get swept up in the excitement, but please heed these words of caution: Do your own research, only invest what you can afford, and make good decisions. The indicators contained in this article will hopefully help in this. Remember though, the content of this article is for information purposes only and is not investment advice or any form of recommendation or invitation. City AM, Crypto AM and Luno always advise you to obtain your own independent financial advice before investing or trading in cryptocurrency.

All information is correct as of 08:30am GMT.

Crypto AM Daily in association with Luno

Crypto world: Cryptocurrencies pose unique challenges and need a judicious approach

In the flux after the 2008 financial crisis, an extraordinary instrument dubbed cryptocurrency was created. Bitcoin, the first cryptocurrency, was introduced by Satoshi Nakamoto, a pseudonym used by the mysterious originator. It turned our understanding of currency on its head. Inspired by the philosophy of “self-sovereign identity” cryptocurrencies are an asset which are not anyone’s liability; neither is there a single authority or institution to maintain records. What we have are digital currencies designed for decentralised operations, cutting out a regulated intermediary like a bank.

Conventional money, or fiat currency, is issued by the state. It is usually the liability of a central bank such as RBI, which also oversees the recordkeeping of transactions. Its essential features are the credibility that comes from being guaranteed by the state, which leads to a central record keeper like RBI. Cryptocurrencies such as Bitcoin and Ripple are just the opposite. They are underpinned by a network called blockchain, run by anonymous computers linked together by a ledger of anonymised transactions. There are two potential issues that arise from cryptocurrencies. Will they supplant conventional currency, a state monopoly? Highly unlikely because inherent limitations of cryptocurrencies limit scalability and mass use.

A cryptocurrency like Bitcoin is also traded on exchanges, including in India, taking on the role of an asset. Here many governments, including India’s, have taken a dim view. Cryptocurrencies thrive on anonymity. They open the door to peer-to-peer transactions that circumvent state controls. FATF, the inter-government body that sets standards to combat money laundering and terror financing, worries about this instrument becoming a safe haven for illegal deals. Will a ban on cryptocurrencies solve the problem? It won’t because not only do they already exist, they are designed to bypass normal filters. It is a tricky issue which needs a well-thought approach.

Facebook Twitter Linkedin Email This piece appeared as an editorial opinion in the print edition of The Times of India.