Looking to the Futures

Bitcoin traded positively in Tuesday’s trading as it continues its rally from the $74,655 monthly low. Bitcoin futures for May, /BTCK25, settled at $95,980, up $475 from previous settlement. 
 

Bitcoin continues to move into the mainstream as states begin to write legislation that establishes bitcoin reserves. Arizona looks to becoming the first state in the Union to finalize this feat with the approval of bills in the house and senate which is now going to the desk of Governor Katie Hobbs. It is not clear if she would sign the legislation as she stated on April 17th, “Any bill not already on my desk will be vetoed until we have a serious, bipartisan funding solution that protects health care for Arizonans with disabilities.”
 

The legislation in Arizona would establish an accountability and control standard for seizing and controlling digital assets. It mandates the investments comply with standard fiduciary risk management protocol. The legislation would also allow for a 10% allocation of treasury and pension funds into digital assets, which would be around $3.14 billion.
 

In other regulatory news, Paul Atkins was sworn in as the 34th Chair of the SEC on Monday. Mr. Atkins has been an advocate in the digital currency space, pushing for transparency in regulations and regulatory bodies in dealing with crypto. 
 

The bitcoin hash rate has taken a hit as with the price of bitcoin. Since peaking on April 8th, the hash rate has been declining which means bitcoin miners have reduced their participation of the network as it hasn’t been profitable. Since April 24th, the hash rate has increased by 27.64M terahashes per second which could indicate a bullish sentiment. 
 

The hash rate is the measure of computing power in the bitcoin network. The exact hashing power is unknown, but an estimate is able to be established from the number of blocks being mined and block difficulty. Traders use this information to gauge the sentiment of the miners. Miners use electricity to power the computers that mine bitcoin. If bitcoin is bearish, then miners might remove computers from network participation as their power expense is not being offset by the profits of mining bitcoin. Likewise, an increase in hash rate in a bearish market could indicate a trend reversal in the miner’s sentiment as they are willing to spend money on energy costs to mine more bitcoin. 
 

The Trump administration, before and after the election, has been adamant about bringing down the cost of energy and making the US the Bitcoin capital of the world. These two promises go hand in hand.

Bitcoin futures for May, /BTCK25, settled at $95,980, up $475 from previous settlement, and opened for Wednesday’s trading at $95,410.
 

Bitcoin is currently above its 50- and 200-day simple moving averages, indicating a bullish trend. Bitcoin crossed and rebounded from the 200-day SMA on April 8th, indicating it to be a support level. The 50-day SMA is at $86,875, and the 200-day SMA is at $80,570.
 

The 14-day RSI is at 64.186% and approaching the overbought threshold of 70%. Although it is approaching the overbought threshold, it appears to have flattened as with the price of bitcoin. This could indicate that traders are awaiting upcoming economic indicators to be released.
 

The directional movement index indicates a bullish trend. The average directional index (white) is moving up in line with the price action. The positive directional index (green) is elevated and has shifted downwards. The negative directional index (red) is depressed but moving up. This overall indicates an established bullish trend but has signs of a divergence which could establish a bearish trend.

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