The following article is the rework of the thoughts put forward by Mati Greenspan, the Senior Market Analyst at eToro.
The hoax about the around the vast amounts of electricity and the pollution created to run Bitcoin [BTC] mining will soon be put to rest once and for all. A massive kudos to the University of Cambridge for bringing a vast amount of clarity to a data set that has been the topic of hot debate over the last few years.
All in all, according to the CBECI FAQ page, there is little evidence to suggest that bitcoin is contributing to climate change and at the very worst case scenario only accounts for 0.17% of the Earth’s carbon emissions. The annualized consumption of electricity for Bitcoin mining is estimated at 53.01 TWh.
Bitcoin’s annual electricity consumption while does rank with countries like Switzerland and Turkey it is considerably less. Moreover, the country-wise comparison suggests that Bitcoin’s electricity consumption is way lower than in some countries.
Correlation Between Bitcoin and Gold
Until now, Bitcoin has moved independently of any other asset class. This is primarily because of its ambiguous nature. However, we can see the price of gold (yellow) against bitcoin (blue) have been moving very similarly since the beginning of May.
So, what happened in May that caused both assets to rise?
Well, the Fed, of course. Earlier during May this year, the Federal Reserves in the US announced that they would be taking a ‘patient’ approach to increasing rates from then. A rate cut is also on the cards in the near future. Hence, the investors will start to hedge their investments in gold and Bitcoin.
So it seems that a loose fed is good for all assets, including bitcoin. The thing is, bitcoin is the only asset that really represents a hedge against them getting too loose with their policy.
On Bitcoin’s Bounce
Bitcoin pulled back 30% from its yearly highs nearly after five days. Bitcoin is getting some much-needed R&S at the moment. After the incredible rally since April 2nd, it’s good to see it finally in a state of relaxation.
Volumes have come down significantly over the last week, and at this point, it’s a bit difficult to know exactly where it will go next. The bounce off the $10,000 key psychological support was critical but so far not enough to know if the pullback is over or if it will go more in-depth.
Do you think Bitcoin price will follow the trendline? Please share your views with us.
Mati Greenspan is the Senior Market Analyst at eToro, a global social trading and investment platform. Mati is a licensed portfolio manager in the European Union and his main focus is on macroeconomic analysis, portfolio diversification and cryptocurrencies. Follow him on Twitter at @matigreenspan