Bitcoin Price Sees Modest Pullback as Crypto Market Hits Resistance
Bitcoin’s price was knocked back below $6,500 on Thursday as part of a wider market pullback that saw yesterday’s leaders turn into today’s biggest laggards.
BTC/USD Price Update
Although much of the selling pressure was concentrated elsewhere, bitcoin still managed to fall 1.2% to $6,496.70 on Bitfinex Thursday. The leading digital currency has since climbed to around $6,541, down roughly half a percent from the previous day.
Trade volumes in the last 24 hours fell 12% to $4.5 billion, according to CoinMarketCap. Derivatives trading continues to be a major mover of the bitcoin price, with BitMEX processing nearly 14% of the daily turnover.
The latest pullback wasn’t surprising if one looks at the momentum indicators on the 4-hour chart. BTC was technically overbought on Wednesday, according to the relative strength index (RSI). The RSI is still in positive territory, which suggests that upside momentum is still in effect.
Bitcoin rose above $6,600 on Wednesday, reaching its highest level in nearly three weeks. BTC’s performance followed in the footsteps of alternative coins like bitcoin cash and XRP, whose gains in the last seven days catalyzed a much wider market rally. Over the same stretch that BCH and XRP rose more than 50% and 20%, respectively, bitcoin rose just 3%.
Bitcoin Mining Leaves Major Carbon Footprint
With bitcoin narrowly trading above mining costs, market participants have increasingly focused on output trends of the world’s largest blockchain. Although bitcoin’s carbon footprint is well documented, new research published by Nature suggests blockchain mining consumes more energy than gold production on a dollar basis.
The paper, which was developed by Max J. Krause and Thabet Tolaymat, showed that mining $1 worth of bitcoin requited 17 megajoules while the same output for gold was 5 megajoules. The only metal that consumed more energy in dollar-equivalent terms were aluminum (122 megajoules). The analysis is based on the time frame of Jan. 1, 2016 to June 30, 2018.
What’s more, the analysts argue that mining of bitcoin, Ethereum, Litecoin and Monero – four of the largest cryptocurrencies on the market – “was responsible for 3-15 million tonnes of CO2 emissions” over the same period.
Although several news outlets have tried to show that cryptocurrency mining will have a devastating impact on the environment, the researchers suggest that the adoption of new technology will ultimately lead to a reduction in greenhouse gas emissions. Case in point: Monero’s April hard fork shows a “considerable drop in network energy demand” when compared with previous energy requirements.
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
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