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Breaking News: SOL Strategies: The First Solana Treasury Company Listed On Nasdaq

Bitcoin Price Reaches Fair Market Valuation, While Costs of Production Rise

Tony "The Bull" Severino
Tony "The Bull" Severino
1 year ago
3 mins read
bitcoin crypto fair market value

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Bitcoin price may be dropping deeper into a downtrend over the course of the last few months, but the first-ever cryptocurrency is actually much closer now to fair market value than it has been throughout the year.

However, as Bitcoin price falls toward fair valuations, the cost of production rises exponentially, and may be part of the cause of the downtrend itself.

Bitcoin Price Valued Fairly At Current Levels, According to New Data

Chartered financial analyst and staunch Bitcoin supporter Timothy Peterson has shared various metrics from crypto data aggregator CoinMetrics related to the leading cryptocurrency by market cap.

Related Reading | Former IMF Economist: Current Bitcoin Trend is “Textbook Echo Bubble”

According to the analyst, Bitcoin is currently trading at prices that would be considered “fair” for the cryptocurrency. Prices have fallen back toward levels of fairness, after spending much of 2019 soaring higher than the fair market valuation of what Bitcoin should be priced at.

Nearly all of my metrics indicate #bitcoin is fairly valued at current levels. I will be posting different metrics throughout the next several days. All data is from @coinmetrics. All my models are based on published research at https://t.co/utY4posQfw $BTC pic.twitter.com/kEJ4G085cc

— Timothy Peterson, CFA CAIA (@nsquaredcrypto) December 18, 2019

Following the crypto asset bottoming out at fair prices around $3,100 at the start of the year, Bitcoin’s parabolic rally took the cryptocurrency beyond its fair price, but nowhere near as overvalued as it was during the crypto hype bubble in late 2017, or even its value during the 2018 bear market.

It wasn’t until Bitcoin bottomed at $3,100 that the cryptocurrency reached fair value, and prior to that, it was 2016 before the crypto bull market really began. At the height of the bubble, Bitcoin reached valuations 1,000% higher than what it should have been.

But even though crypto prices are falling toward fair valuations, the cost of producing each BTC continues to rise.

Rising Costs of BTC Production Causing Crypto Miners to Capitulate

According to a chart shared by digital asset analyst Charles Edwards, who has developed a tool that plots production costs onto Bitcoin price charts on TradingView, the price per BTC has begun to fall below the cost of production, causing miners to capitulate en masses, which could be in part responsible for the recent downtrend in crypto markets.

I have built a live open-source indicator to plot Bitcoin's Production Cost in TradingView.

This is the definition of a miner capitulation.

The average miner globally is not operating at a profit.

Article: https://t.co/dgij9rGu9k

Indicator: https://t.co/rNqgLM1ovp

— Charles Edwards (@caprioleio) December 19, 2019

With Bitcoin’s halving in May set to reduce the block reward crypto miners receive in BTC by half, the cost of production could double overnight. How this may impact the market is anyone’s guess, but it could cause extreme selling by capitulating crypto miners, rather than pushing up the price of the scarce digital asset as many others are expecting to happen.

Related Reading | Bitcoin Must Clear Multiple Resistance Levels Before It’s Out of The Woods

Bitcoin price is currently trading at roughly $7,150, a couple of hundred dollars less than the cost to produce each BTC. Interestingly, the fair market valuation metric also appears to coincide with of producing each Bitcoin.

Featured image from Shutterstock
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Tony "The Bull" Severino
Tony "The Bull" Severino

Tony "The Bull" Severino

Tony "The Bull" Severino, CMT, is a distinguished figure in the cryptocurrency analysis sector, renowned for his in-depth technical expertise and innovative approach to market trends. As the Head of Research at NewsBTC, Tony leads a team dedicated to providing cutting-edge insights and forecasts, helping both novice and experienced traders navigate the complexities of the crypto market.
A seasoned Chartered Market Technician, Tony's prowess in identifying and capitalizing on market patterns is unmatched. His academic and professional journey in market analysis has firmly established him as a leading authority in technical trading strategies. Tony’s approach is heavily influenced by the principles of Elliott Wave Theory, a method known for its rigorous assessment of investor psychology and price movements.

Read more

Beyond his role at NewsBTC, Tony is the visionary founder of CoinChartist.io, an educational platform aimed at demystifying the nuances of cryptocurrency trading. CoinChartist.io serves as a valuable resource for traders seeking to enhance their technical analysis skills. The platform offers a range of learning tools and resources designed to empower traders with the knowledge to make informed trading decisions.

In addition to his educational initiatives, Tony is a prolific author and a dominant voice in the crypto community. He writes the CoinChartist VIP newsletter, a weekly dispatch that has become a staple among crypto enthusiasts, revered for its insightful analysis and actionable trading advice. This newsletter has consistently ranked as a best-seller on SubStack, boasting thousands of subscribers who rely on Tony’s expertise to guide their trading strategies.

Tony is also celebrated for his literary contributions to the field. He is the author of the highest-rated Crypto Trading Journal on Amazon.com, a testament to his ability to communicate complex trading concepts in an accessible manner. This journal is widely regarded as an essential tool for traders aiming to track their progress and refine their strategies.

Before his ascent in the financial analysis world, Tony honed his skills in journalism. His background in this field has endowed him with a unique ability to present intricate market dynamics in a clear and compelling manner, making his insights highly sought after by a broad audience that ranges from casual readers to professional traders.
His professional affiliations underscore his commitment to excellence and continuous learning. As a partner of Elliott Wave International and TradingView, Tony collaborates with other leading experts to enhance his knowledge and skills. His active membership in the CMT Association further aligns him with the highest standards of industry practices and ethics.

Tony’s nickname, "The Bull," aptly reflects his aggressive and optimistic outlook on the cryptocurrency markets. His forecasts often anticipate significant upturns, earning him a reputation for bullish predictions that have frequently led to lucrative outcomes for those who follow his advice.

In summary, Tony "The Bull" Severino, CMT, is more than just a technical analyst; he is a mentor, educator, and innovator whose influence in the cryptocurrency space continues to grow. His dedication to advancing the understanding of market forces and his commitment to providing high-quality, reliable analysis make him a pivotal figure in the world of cryptocurrency trading.

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Disclaimer: The information found on NewsBTC is for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell or hold any investments and naturally investing carries risks. You are advised to conduct your own research before making any investment decisions. Use information provided on this website entirely at your own risk.

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Reason to trust

Strict editorial policy that focuses on accuracy, relevance, and impartiality
Created by industry experts and meticulously reviewed
The highest standards in reporting and publishing
How Our News is Made

Strict editorial policy that focuses on accuracy, relevance, and impartiality

Ad discliamer

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