Photo of author

By Marilyn Royce

The cryptocurrency environment is well-known for its volatility, with prices changing quite rapidly over the course of just a few days. This characteristic was perhaps never more noteworthy than during 2022, when values plummeted by around 70% compared to 2020 and 2021, when they hit an all-time high. However, in 2023, the market began to change again, this time for the better, with prices starting to climb tentatively back up again. Because the prices change so often, checking the current values of Bitcoin before commencing any transaction is particularly important to ensure that you’re putting your capital to good use. Therefore, it should come as no surprise that the news regarding the crypto environment is just as changeable.

Here are some of the latest that are sure to leave their mark on the digital asset world.

Dormant Bitcoin 

Although BTC was initially designed to power daily transactions, that couldn’t use case couldn’t initially be implemented due to several reasons, including pricing volatility and an unwillingness from businesses and institutions to trust digital assets and use them. According to research, one in two Bitcoins haven’t been moved over in at least two years, and almost a third of coins haven’t been moved in over five years. The number of dormant coins reached an all-time high in February this year, with the old supply believed to stand at nearly 15 million. In fiat currency, that’s worth approximately $460 billion.

On-chain analytics show that this means that over half of Bitcoin’s current supply is inactive. For around two years, the figures have hovered just shy of 45%, achieving 53% during the first months of 2023, suggesting that those who bought a few years ago are currently unwilling to sell. This is perhaps not surprising considering the fact that Bitcoin has earned a reputation as being a digital store of gold due to its ability to maintain its value over a long time and act as a hedge against inflation.  

This isn’t necessarily a negative thing, as many investors remain underwater, particularly considering the fact Bitcoin is still trading at around 60% compared to November 2021, when it had achieved its highest value ever.

On-Chain Movements 

Since research shows that over $150 billion coins in market capitalization haven’t moved in around half a decade, there are several things you can deduce about the current state of the market. Out of it, around 15% haven’t moved in a decade, and there are several possible causes for this. Many of these coins are believed to have been forgotten or lost. Still, others believe it might also be the case that some investors are incredibly disciplined.

The number of non-zero Bitcoin addresses has recently achieved 45.5 million, its highest-ever value, suggesting that on-chain activity is picking up and improving. The BTC to exchange inflow volumes have reached a brand-new monthly low, implying that self-custody and holding onto the asset are occurring at an ever-increasing pace. It can also be a sign of a considerable increase in selling pressure.

Liquidations pricing 

There are many things you need to consider before commencing a transaction, considering that so many different things could impact the price of Bitcoin. After its 70% surge earlier this year, which has continued to evolve, Bitcoin might meet a slight liquidation risk. These movements refer to the closure of the bullish and bearish positions in futures markets.

The risk comes from the fact that while Bitcoin’s rally has reinvigorated the derivatives market, leverage use remains low, which could indicate price swings. The leverage degree is measured as the ratio between the crypto market cap and the dollar futures value. The short liquidations predate bullish movements, while the long ones exacerbate the bearish tendencies. In 2021, alterations between long and short squeezes were relatively common, while in 2022, leverage was exceptionally high compared to the size of the market. In 2023, however, the price continued to drop.

However, according to analysts, since the medium-term trend continues to hold, this should provide investors with sufficient reassurance that prices aren’t going to decrease to the levels they recorded in the final months of 2022.

Energy usage

For a long time, many have considered that cryptocurrencies have an energy consumption problem. Recently, the real-life costs of mining became easy to recognize in Texas, back in the winter of 2021, when severe winter storms hit the state in February. Approximately 4.5 million households and businesses were left without power, with the outage lasting two weeks in total. While estimates vary as to the number of people who were affected as a result of the crisis, the figures show that a few hundred people passed away because of the blackouts, either directly or indirectly.

Cryptocurrencies came under fire at the time, as just outside Austin, a mining hub was using enough electricity to power nearly 7,000 homes. While anybody can be a miner, you’ll need to consume quite a large amount of electricity to earn significant amounts of revenue. Energy consumption on its own isn’t the only problem. The prices have surged as a result, with consumers noting a raise of approximately 5% to their bills. And, of course, environmental pollution is also important to mention, particularly in the case of the increasing push for sustainability within society.

However, some mining companies have claimed that being singled out or even scapegoated in this regard is unfair and that many other industries consume equal or exceeding amounts of power. Many have challenged the idea that they are directly responsible for causing harm to the environment, and some even believe that the efforts are a method used by detractors to undermine the burgeoning crypto-mining industry in Texas.

With further push towards obtaining energy from clean sources and finding ways to optimize the process and make it more efficient, it could be that Bitcoin will soon get to ditch the mantle of being a great polluter and show its critics that it has evolved past those concerns. In the meantime, the market remains somewhat troubled, and there’ll still be some time until it regains its previous strength. However, in the meantime, investors are armed with a lot of patience and strong strategies to help them succeed.