Hey yo, what is going on with my people, who
I like to call the viewers of the tube.
First, let me introduce myself as Tyler and
you are watching the crypto channel, that
has the alternative views that make him a
lone wolf, but as more people see the craziness
for what it is, they begin to join, just like
this wacky boi, at the sasquatch music festival
2009…..you know how we get the party started.
It’s time for Chico Crypto!
Well the Bitcoin party isn’t too popping
right now, pulling out the 24 hour chart,
it’s actually extremely bearish, with a
series of lower highs.
Starting at about 9100, then a dip, but rebound
to a lower high of 9050, where I put in my
short on Sunday, so far a great call!
Because the price once again dipped, down
to the 8800 level...which we tested 8850,
and then got rejected back to the 8800 level.
So am I keeping my fully legal short open?
Yes sir!
Because...things are not looking the best
fundamentally with BTC in the short term because
a miner purge is currently happening & an
area where bitcoin mining is concentrated
is currently at risk of being shut down!
So to begin, let’s analyze the current miner
purge.
So we just experienced the 1st difficulty
adjustment of the bitcoin network, post 2020
halving and for the miner’s that survived
it provided much needed relief.
Pulling out the difficulty chart, we can see
it is only the second downwards adjustment
in 2020, and since last year May 2019, it’s
only the third significant downward adjustment.
The significant majority in the past 365 days
has been upwards.
So, we need to analyze the dates of the adjustments
in the past, when we had those significant
downward movements in difficulty, and what
the effect was on the price.
Of course during the crazy panic in March
2020, we had a downward adjustment but also
from the chart we can see the other one cam
in the beginning of November 2019.
So what happened in March 2020...well first
we need to understand the difficulty adjustment
comes every 2 weeks.
And back in March of 2020, unfortunately the
adjustment came right before the major March
crash...as we can see, the difficulty chart
the adjustment came on March 9th upwards,
as the price was still holding and miners
were profitable at the level, as this was
prehalving.
But then pulling out the price chart, bitcoin
took a major dip and had rocky roads throughout
March, only hitting 6k by the end of the month.
Well 2 weeks after the March 9th adjustment
came, and since the price was rocky...the
difficulty adjusted downwards, a major one...as
the mining profitability slimmed out.
Now let’s go to November 2019, the other
time a significant downwards adjustment came.
2 weeks before, the adjustment pumped on the
day October 25th, and if we pull out the price
chart, we can see why the price had a significant
pump during the adjustment, so miners started
to rally back online….but by the next adjustment,
by November 7th a significant adjustment drop
which if we pull out the price, it began deflating
down...by the 24th of the month, to 7k.
So is what’s happening now, our current
downwards adjustment, more like March 2020
or November 2019?
I would have to say, more like November...as
we didn’t just have a crazy dip, circuit
breakers pulled as Bitmex went offline in
the middle of global panic.
Now let’s pull out the recent adjustment
charts, we had an upwards movement back on
May 4th pre halving, but then as we know we
had a big dip.
Let’s just pull out the november chart,
very similar adjustment up, and then a big
dip.
What about the price?
Similar thing, during the adjustment in early
may, the price got pumped.
Pulling out the november 2019, price got pumped,
but then it deflated down, a very, very similar
thing happened today, although a tad bit more
volatile, it is a downwards trend, and similar
losses of about 1k.
I wonder what happened, in the 2 weeks after
in November to the price?
It deflated down, even more significant down
to the 7k level.
I am no predictor, I am no mind reader, but
fundamentally things look similar to november
and I would expect a similar thing happening
to the price, I have my eyes set on the high
7ks in the short term.
Why?
We still have 10 days at the current difficulty,
and if the price keeps slowly moving down
or even staying at the current levels the
pressure put on miners is going to be like
something they haven’t seen in ages.
The relief given, to those hanging onto breakeven
from the recent adjustment downwards, is being
nullified by the falling prices.
And if you go to the bitcoin difficulty estimator,
they are predicting with the next adjustment
which happens between june 4th and june 5th,
for it to go down once again.
And another significant one…...
The first time, for the difficulty to go down
2 times in a row, in looong time, since the
end of 2018.
Now, we know where most of the Bitcoin hashrate
comes from.
China!
It’s no secret that they have the largest
distribution of bitcoin mines, large and small
in the world.
And the bitcoin mining pools are usually chinese
owned and controlled.
The university of cambridge, put out some
nice data, which showed based on analyzing
3 pools, poolin, f2pool, and viabtc...that
the bitcoin hashrate was coming over 65 percent
from China.
Although numbers would be less if we added
all pools, globally and averaged it out, as
f2, poolin, and via are all chinese, thus
the sample would be skewed heavily towards
china.
I would put the number actually around 60
percent, if we used all global pools.
But if we switch to China, they break down
hashrate by region in the nation….as we
can see 9.66 percent of the hashrate is coming
from the Sichuan Region….
What is this region all about?
Well like I said in the beginning, there is
an area of the world with a large concentration
of bitcoin miners that is being threatened.
And it the Sichuan Region…Now, if we took
our personal estimates that 60 percent of
the global hashrate in controlled by China,
and we took 9.66 percent of that, the Sichuan
region would control 5.25 million Terahashes,
of the global 90.6 million powering the bitcoin
network or 5.7 percent of global hashrate
Significant yes...and many outlets are covering
what is happening.
Headline here, “Bitcoin Miners in Sichuan
Province Ordered to Shut Down in ‘Orderly
Manner’” Which they say, sichuan roughly
controls 10 percent of the global hashrate...false,
you guys, its 5.7 percent….
Now, the story comes from this document, which
is reportedly from the Department of Finance,
of the people government of the sichuan province...and
translated says, that miners are ordered to
begin shutting down their operations, in an
orderly manner.
So that right there, could mean a big shake
up, as Sichuan is home to the branch offices,
of Bitmain and it’s mining pool, antpool
and other large mining outfits, obviously...so
is this something which could shake throughout
the entire country and spread to other regions,
or is this just limited to the single province?
Well Chico, thinks the latter, as in December
of 2019, Coinshares analyzed the bitcoin mining
network, and they estimated china to control
over 66 percent of the hashrate, and guess
what region was #1?
Sichuan...they had 54 percent of that hashrate...well
according to cambridge, that has dropped to
just 9.6 percent, and now Xinjaing is the
dominant region.
So, if they do force the 9.6 percent that
is left, because it looks like the purge from
this region has been going on since December,
the profitable and efficient miners will just
move to other more friendly regions.
So long term, it’s not much of a story….
But short term, it will add to the downwards
sell pressure, in my opinion, as these operations
will have to sell and dip into their reserve
BTC stashes to move...moving cost’s money
you know…
Well you guys, you won’t see me drawing
lines on a chart, I look to the fundamentals
and that is where I base my decisions.
Because you know your boi, Chico is based.
Cheers I’ll see you next time!
