French National Assembly Votes Not To Consider NFT Games As Gambling
The Jonum regime seeks to strike a balance between encouraging innovation in French startups and ensuring user protection.
ClementLog in/ Sign up
Why Bitcoin Production Cost Is A Very Likely Bottom
Follow
Bitcoin price is barely above $20,000 per coin – a shock to most new and long-time holders of the cryptocurrency alike. The selloff took the cryptocurrency back down to its production cost, which has acted as a bottom in the past.
In this article we’ll take a closer look at the cost to produce each BTC and its relationship with price action. We’ll also examine why the scarce digital asset could very likely find a bottom at such levels.
Bitcoin Falls To Production Cost, Aligns With Former ATH Retest
Bitcoin is unlike any other asset before it, and since its inception an entire industry has been created hoping to mimic the success of its network. Investors pile into altcoins hoping to find the next Bitcoin and profit.
The cryptocurrency relies on an energy-intensive proof-of-work process to generate new coins. Mining isn’t cheap, or else everyone would do it. In fact, according to the Production Cost Indicator designed by Bitcoin expert Charles Edwards, it costs roughly $20,260 per BTC at the low end.
Related Reading | Coinbase Considers Bitcoin Creator A Risk To Business, Here’s Why
It doesn’t take a mathematician with the skills of Satoshi to know that’s barely a few hundred dollars away from current prices. Interestingly, the selloff fell straight to the cost of production. Looking back, significant bottoms such as December 2018 and March 2020 both touched the lower boundary.
The high end of the metric is around $33,766, which once breached could be a sign that the downside is finished. Similar to Black Thursday, retesting it is even more bullish.
BTC Production Cost Indicator could call the bottom | Source: BTCUSD on TradingView.com
How Satoshi Called The Bottom 12 Years Ago
Considering a bottom after such a brutal selloff and amidst the backdrop of the most bearish macro environment Bitcoin has ever faced, could seem hard to believe or even too good to be true. But there is a reason for this sort of base-building behavior in scarce assets.
Scarce assets like commodities tend to build a base and bottom out around the cost of production. Even Satoshi discussed this in the past, dating as far back as 2010. The mysterious founder is quoted as saying that the “price of any commodity tends to gravitate toward the production cost. If the price is below cost, then production slows down. If the price is above cost, profit can be made by generating and selling more.”
Related Reading | Why Bitcoin Doesn’t Need Musk, Saylor, Or Anyone Else
What Satoshi describes is the revenue model which BTC miners follow. They produce new coins at as profitable of a rate as they can, and sell them as price deviates higher than the cost of production. Returning to such levels, often cleanses the market of less efficient operations, leaving only the fittest behind.
BTC miners are capitulating | Source: BTCUSD on TradingView.com
Is this what is happening now with Bitcoin? And what happens when only the strongest have survived? Could Satoshi have really predicted the bottom this far in advance?
Follow @TonySpilotroBTC on Twitter or join the TonyTradesBTC Telegram for exclusive daily market insights and technical analysis education. Please note: Content is educational and should not be considered investment advice.
Featured image from iStockPhoto, Charts from TradingView.com
Gain a broader understanding of the crypto industry through informative reports, and engage in in-depth discussions with other like-minded authors and readers. You are welcome to join us in our growing Coinlive community:https://t.me/CoinliveSG
Add Comment
LoginLeave your comments
0 Comments
Earliest
Load more comments
Live Updates
- Ubisoft To Launch 10,000 NFTs On Arbitrum For New GameBullishBearish
- Goofy Sees Significant Surge In Value Over Past WeekBullishBearish
Trending News
- Clement
Biden Issues Executive Order on AI Safety and Standards
By establishing AI safety standards, prioritising privacy, and fostering global collaboration, this directive aims to ensure the ethical development of AI.
CatherineUnibot Hacked: $560K Stolen as Token Price Plunges Over 40%
Unibot, a trading bot on Telegram, suffered a contract exploit that led to the theft of roughly $560,000 in various cryptocurrencies. The incident caused the UNIBOT token's price to plummet by over 40%, although recovery efforts are underway.
YouQuanIs Andrew Tate Right About Bitcoin?
In his unconventional perspective on Bitcoin, Andrew Tate emphasises the significance of financial autonomy and control, resonating with those who value personal sovereignty in an age of government influence. While not everyone may concur with Tate on all matters, his insights on Bitcoin act as a unifying focal point in the pursuit of financial independence.
JasperFormer FTX Ambassadors in Africa Face Backlash Amidst Exchange Collapse
African students who served as FTX Ambassadors are now enduring threats and backlash in the aftermath of the FTX cryptocurrency exchange's collapse. These ambassadors had actively promoted FTX to friends and family, and the ensuing loss of investor funds has led to blame and personal safety threats against them.
JixuMetaMask Enhances User Security with Blockaid Alerts
To bolster user security, the popular crypto wallet is introducing a feature designed to fortify defences against fraudulent schemes, phishing attacks, and cyber breaches
CatherineCircle to Cease Individual Account Operations in November, Sparking Debate
Circle's announcement to terminate consumer accounts has triggered a vigorous debate within the crypto community amidst deepening regulatory hurdles.
KikyoFTX Shuffles $156 Million in Digital Assets, Including Ethereum and Solana, Amid Bankruptcy
Wallets linked to the financially troubled crypto exchange, FTX, have recently conducted transfers amounting to approximately $156 million in various digital assets, such as Ethereum (ETH) and Solana (SOL), as reported by blockchain analytics firm Nansen.
JasperKenya's Digital ID Implementation Set to Launch in December
Kenyan government to introduce Digital Identification system, promising streamlined access to services and enhanced commerce.
Hui XinMicrosoft and Siemens Join Forces to Drive AI Uptake in Industrial Sectors
Microsoft and Siemens unveil a generative AI assistant tailored to meet the specific needs of professionals across sectors like manufacturing, healthcare, transportation, and infrastructure.
Catherine