One trader believes that Bitcoin has hit its lowest point, while other experts and on-chain indicators suggest that the current price range presents a rare chance to buy Bitcoin, akin to a once-in-a-lifetime opportunity. Recent reports indicate that the movement of Bitcoin by miners to exchanges following a drop to $17,600 could mark the market’s low point.
Despite the confidence of various analysts on Crypto Twitter, Bitcoin’s price remains in a declining trend, and metrics do not entirely show that traders are buying on every price dip.
A crucial but often overlooked aspect that influences Bitcoin’s price is the status and sentiment of Bitcoin miners. To delve deeper into this, Cointelegraph spoke with Rich Ferolo from Blockware Solutions and Will Szamosszegi from Sazmining Inc. to gain insights into the mining industry’s current situation and its potential impact on market sentiment moving forward.
Cointelegraph: Can we confirm that Bitcoin has reached its lowest point? The price reached $17,600 about two weeks ago, and it seems like the market may have undergone a dramatic sell-off. What are your thoughts?
Will Szamosszegi: It’s hard to determine if Bitcoin has hit its lowest point. I generally recommend a dollar-cost-averaging approach where you buy Bitcoin consistently with an amount you are comfortable with. Bitcoin has experienced more significant declines in the past, such as drops of 93.7% and 83.4% in previous years. Historically, Bitcoin has shown gains over any four-year period.
CT: Currently, Bitcoin is trading below its actual price and below the production cost for miners. The price has also fallen below the previous all-time high, and the hash rate is decreasing. On-chain analysts often view these metrics hitting extreme lows as an opportunity to invest for the long term. Is this analysis accurate?
Rich Ferolo: Blockware’s studies show that the breakeven price for older machines like the s9 from 2016, with electricity cost at $.07 per kilowatt, is $38,000. As Bitcoin evolves, older machines will gradually exit the network. Newer machines like the s17s require Bitcoin to be around $18,000 with the same electricity cost. The value of machines decreases over time, but they provide a daily yield similar to Bitcoin. While the price of Bitcoin impacts mining, it’s crucial to consider broader factors affecting Bitcoin’s price and the broader crypto market.
To read the full article, click here.Do not provide yields that leave you exposed.
RF: It was somewhat expected that there would be a significant downturn, given how retail investors had participated in the past market cycle. Although smart investors anticipated a prolonged bear market, the sudden and rapid downturn caught everyone off guard. The anticipated peak in prices never materialized.
Cryptocurrency has gained more exposure, mostly negative, due to recent market collapses, with more negative coverage to follow as the media tends to amplify bad news. However, for those who believe in Bitcoin, this could be an ideal time to invest in the market, once the negative sentiment subsides.
Many people may have sold at the lowest point and might not return to the market, which is a common pattern in market dynamics.
CT: The upcoming halving event in 676 days is expected to impact industrial mining operations and the amount of equipment needed to solve increasingly complex algorithms. How do you foresee this affecting the industry?
RF: Halving events typically lead to miners shutting down operations. Surprisingly, the hash rate has not dropped as significantly as anticipated, only about 20% to 25%. This is due to older machines being unplugged when the operating costs outweigh the rewards. However, the hash rate typically increases post-halving, temporarily benefiting older machines. Miners tend to shut down operations when costs are high and restart when conditions are favorable.
WS: Miners will aim to cut costs as the halving reduces the Bitcoin rewards, potentially making many operations unprofitable. The mining equipment will continue to become more efficient, and miners will seek out cost-effective energy sources to remain competitive. The halving is a key feature of the Bitcoin network as it helps remove inefficiencies in the system.
Remember to conduct your research before making any financial decisions, as the content provided here is for informational purposes only and not investment advice.
Image Credit: Momentum Ronnarong / Shutterstock
