Third Time’s a Charm: Has Bitcoin Bottomed At Miner Breakeven Again?

Tony "The Bull" Severino

5 years ago

3 mins read

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Few factors influence Bitcoin price beyond simple speculation and supply and demand dynamics. However, the energy costs associated with mining each Bitcoin appear to have a strong impact on where and when the asset bottoms.

The leading cryptocurrency by market cap bottomed when Bitcoin went below this key cost of production metric back in 2018, then bottomed once again when it fell below in late 2019. Bitcoin has just touched that “miner’s bottom” for a third time – could this be a “third time’s a charm” situation that sends finally Bitcoin into a new bull market?

Bitcoin Reaches “Miner’s Bottom,” Breakeven With Cost of Production

Bitcoin is a unique asset unlike anything else to ever exist before it. It has such disruptive potential, and the entire market of crypto assets was designed since each trying to unseat the reigning champion of the cryptocurrency market.

But because Bitcoin and other crypto assets aren’t currently widely adopted, and have futuristic use cases allowing users can be their own banks, valuations are currently primarily speculative.

Some analysts have attempted to make sense of Bitcoin’s long-term value by analyzing the asset’s pre-programmed digital scarcity, but the results are mixed at best.

One metric, however, appears to have serious validity in establishing a baseline value for the first-ever cryptocurrency: the cost of production.

BTC is rewarded to miners for powering the underlying protocol and validating each block being added to the blockchain.

But it costs money in energy consumption to validate each block, so miners must be keenly aware of the cost of production and its proximity to the price of each BTC.

This“miner bottom” is the breakeven price where the price of Bitcoin reaches the same it costs to produce each BTC.

Is This The Final Buy Signal Before the Bull Run?

The theory is at that point, miners have little incentive to sell their Bitcoin at a loss. The slowing supply from the most substantial sellers in the market being dumped causes demand to eventually overtake supply, and the asset value rises again.

Bitcoin went far below this miner’s bottom in December 2018 when it set its bear market bottom. Then when Bitcoin fell below $6,500 in December 2019, the asset once again went below this cost of production baseline.

The cryptocurrency is there once again and may have found yet another local bottom. This latest bottom would act as yet another higher low, suggesting that Bitcoin is on its way into a new bull trend.

With the halving ahead, the cost of production is projected to double when the supply miners receive of BTC for mining each block is slashed in half.

Miners will likely halt selling once again, and it could fuel the next major Bitcoin bull market.

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.

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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.

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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.