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Great steemians welcome to my week 2 season 5 task with the topic Metric Indicators. Kiddos to prof@pelon53 for quality delivery.
Question 1
Indicate the current value of the Puell Multiple Indicator of Bitcoin. Perform a technical analysis of the LTC using the Puell Multiple, show screenshots and indicate possible market entries and exits.
In order to answer this, i will like to explain puell Multiple Indicator of Bitcoin.
Puell Multiple is a popular Bitcoin indicator that estimates that the profit margin of mining pools is now compared to the historical average of for the year.
The Puell Multiple Indicator:
Puell multiple indicator is an indicator that is used to estimate or calculate the current mining pools of bitcoin by comparing it to the one attainable in the last one year.
Puell Multiple is a popular Bitcoin indicator that estimates that the profit margin of mining pools is now compared to the historical average of for the year. The Puell Multiple Indicator is a market indicator for assessing the severity of market selling pressures on mining companies.
Puella indicators are widely used by traders to forecast the next move of a specific cryptocurrency asset. As the discussion progresses, I will add to this.
The multiple traction is defined as the ratio between the daily value of the currency issued in USD divided by 365 days on average of the daily value of the coins made in USD.
Mathematically, it can be written thus;
Puell multiple = Daily BTC issued in USD/365 day Moving average of the BTC
Interpretation
This indicator informs traders when miners are willing to sell their assets and also informs them when buying bitcoin at a very low price in the market is possible.
Puell Multiple may be interpreted as "If all mined bitcoins have been bought straight away within side the marketplace, how worthwhile mining swimming pools are in comparison to closing historic one year?". This metric facilitates buyers gauge the marketplace cycles from the worldwide view.
The multi-puell indicator consists of two areas. upper area and lower area. The lower area ranges from 0.1 to 0.5. In this case, the upper area is 4 to 10.0
The screenshot above displays the puell multiple indicator on BTC chart. From the chart it can be deduced that the current value of Puell multiple indicator is $1.152655 as at the time of writing this task on 25th November, 2021.
TECHNICAL ANALYSIS OF LTC
For technical analysis of LTC, we used the glassnode website with LTC charts and Puella indicators. Started in 2014, the chart above shows the price of LTC and the Purell indicator. As of May 2014, LTC was priced at $10.35, but looking at the chart, you can see that the price is below 0.5 on the Purell indicator, so it's time to buy. According to the chart, the first buy signal was received on Wednesday, August 13, 2014. When the LTC price was $5. This means that miners are making less money and now is a good time to shop. The second purchase was made in January 2015, when the chart moved to the green bar of the Purell indicator from 2015 to 2017, when the LTC price fell to $1.5. This simply means that miners have been underrepresented during this period, but have been on an upward trend since 2017, with LTC prices rising sharply from around $4 to $300. The uptrend gave a sell signal as miners are now making more money and selling during this period will benefit traders. The first buy signal can be seen in May 2017 when the Purell indicator moved to the red band and continued to increase the band value from 5.88 to 10 before starting to decline again. The downtrend led to another buy trade in 2018, where the price fell to.
The 2019 chart showed another selling point, with Net Worth moving up to 6 and the LTC price also moving up to around $135, but the last buying option you see on the chart is 2020, as shown in the screenshot below;
The red circle shows sell while the green circle shows buy
Source
Question 2
Explain in your own words what Halving is, how important Halving is and what are the next reward values that miners will have. When would the last Halving? Regarding Bitcoin.
*What is Bitcoin Halving? *#####
To fully grasp the significance of Bitcoin halving, we must return to Satoshi Nakamoto's Bitcoin white paper. This article made one thing abundantly clear. Strict guidelines have also been established for when and how new coins will be issued in order to ensure supply for decades to come.
The Bitcoin halving is a computerized interaction that divides the bitcoins that miners receive as a reward for creating a new block. It was designed to energize mining by utilizing proof of work.
Bitcoin was the first digital currency to implement a halving mechanism. This is because the number of bitcoins that can appear is limited and is set in the Bitcoin programming to a maximum of 21 million bitcoins. This computerized cycle is known as halving, and it is used to set a specific time until the end of the coin's issue.
Bitcoin was the first digital currency to implement a halving mechanism. This is because the number of bitcoins that can appear is limited and is set in the Bitcoin programming to a maximum of 21 million bitcoins. This computerized cycle is known as halving, and it is used to set a specific time until the end of the coin's issue.
Cutting bitcoins in half is especially important for traders as the number of new bitcoins created by miners is declining. This limits the supply of new coins, so if demand for Bitcoin remains stable, the price may rise.
Reward values that miners will have.
In 210,000 blocks created every four years which after the reward of miners are halved after successful completion of every 210,000 blocks created.
| S/N | Event | Year | New Block number | BTC Block reward | Total new bitcoins achieved |
|---|---|---|---|---|---|
| 1 | Bitcoin Created | 2009 | 0 (genesis block) | 50 BTC | 10,500,000 BTC |
| 2 | First BTC halving | 2012 | 210,000 | 25 BTC | 5,250,000 BTC |
| 3 | Second BTC halving | 2016 | 420,000 | 12.5 BTC | 2,625,000 BTC |
| 4 | Third BTC halving | 2020 | 630,000 | 6.25 BTC | 1,312,500 BTC |
| 5 | Fourth BTC halving | Coming 2024 | 740,000 | 3.125 BTC | 656,250 BTC |
| 6 | Fifth BTC halving | Coming 2028 | 850,000 | 1.5625 BTC | 328,125 BTC |
| 7 | Sixth BTC halving | Coming 2032 | 1,050,000 | 0.78125 BTC | 164,062.5 BTC |
Question 3
Analyze the Hash Rate indicator, using Ethereum. Indicate the current value of the Hash Rate. Show screenshots.
In an analysis based on the hash rate indicator using Ethereum, the hash rate indicator is used to determine the number of operations that occur in a block or that can be issued by miners, so depending on the items based on past events, the hash rate flow on the chart is It started increasing from January 2021 and there was a decrease at that moment, and in the same month the hash rate gains momentum from the support level of the diagram projected in the future, thus, all this is the effect of the number of people involved in hash generation . So, the more hands there are, the more the increase occurs, and the fewer the participants, the lower the hash rate.
Hash rate is a unit of estimation for the measure of power being consumed by the organization to persistently work.
As of the analysis done on the Glassnode Estudio, here i was able to figure out the the hash rate indicator with Ethereum, hence the following mean hash rate has 691,758,878,364,000/s terahashes per second as of friday 1 oct. 2021 Which has a valued price at $3,307.48
Question 4
Calculate the current Stock to flow model. Explain what should happen in the next Halving with the Stock to Flow. Calculate the Stock to flow model for that date, taking into account that the miners' reward is reduced by half. Show screenshots. Regarding Bitcoin
The stock-to-flow model is a method of estimating the richness of Bitcoin. The stock-to-flow ratio is the amount of Bitcoin held for possible future purposes divided by the amount available for use every four years.
You can use these two dimensions (stock and flow) to ensure the inventory-to-flow ratio. It also shows how many bitcoins enter the market each year within a given time frame compared to the maximum supply. Bitcoin flows show that the higher the stock-to-flow ratio, the fewer new bitcoins entering the market compared to the maximum supply (21,000,000).
Calculate the current Stock to flow model:
In other to get the current circulation, we will check the coin market as shown on the screenshot below;
Coinmarket.com
So we have 18,884,625
SF = stock / flow
so every 4 years there is a halving of the asset supply and there is a creation of new blocks every 10mins. working with this statistics, we will be have 52,560 blocks every year
in order to calculate the flow it is given by the reward per block x the block production per year
flow = 6.25BTC x 52,560 = 328,500
SF = stock / flow
SF = 18,884,625/328500
SF= 57.487
current stock to flow = 0.4 x SF ^ 3
0.4 x 57.487 ^ 3 = 75,992.18
In the next halving which will take place in 2024 hopefully the early hours of 2024. the reward for mining a new block will be halved from 6.25BTC to 3.125BTC. we will also have new 656,250BTC issued.
Taking into account that the reward will be reduced by half, I will be calculating with 3.125BTC instead of 6.25BTC. with 18,884,625 currently in supply let's dive into the calculation.
flow = 3.125BTC x 52,560 = 164,250
SF = stock / flow
SF = (18,884,625 + 656,250)/164250
SF= 118.970
current stock to flow = 0.4 x SF ^ 3
0.4 x 118.970^ 3 = 673,553.933 BTC
CONCLUSION
I really enjoyed the episode of the course.
I Learned about the hash rate and the average time it takes to generate a block. what an increase in hash rate means and what a decrease means We didn't stop there; we went on to discuss halving and when the next halving will occur.
I learned about the stock-to-flow indicator and how to calculate and read it on a chart.
It was so impactful and thanks to Professor @pelon53
Best Regards
@charis20