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Can Bitcoin Hold On To $90K And Stop Miners From Going Underwater?
The price of Bitcoin (BTC) has been a subject of significant concern in recent times. The cryptocurrency’s current valuation is under scrutiny as the cost of mining is expected to rise due to an impending 4% increase in network difficulty, slated for Sunday. This development has sparked questions about whether BTC can hold on to its present value and prevent miners from going underwater.
In a bid to offer some insight into this predicament, renowned analyst James Van Straten has shared his views on the matter. According to him, the Hash Ribbon, a key indicator that tracks miner profitability and potential exits from the market, has been flagged. This development, as historical data suggests, may indicate that Bitcoin miners are in distress and a likely bottom signal for BTC is imminent.
Historically, the Hash Ribbon has coincided with the cryptocurrency’s bottoms. Will this trend repeat itself though? That remains to be seen. Straten further added that despite the impending increase in network difficulty and the expected stress it will put on miners, he believes Bitcoin might still defend its $90K-$105K price range.
It is essential to comprehend what “network difficulty” implies. Simply put, this refers to the level of complexity required for miners to find a block (mine BTC). As the difficulty adjusts upward by 4%, miners will be compelled to utilize more computational resources, thereby increasing their average costs. Currently, the average BTC mining cost stands at $86.5K, as reported by MacroMicro data.
In the event that Bitcoin’s price drops below this average mining cost, it would mean that the average miner is now in the red and under immense pressure. Interestingly, historical data has consistently shown that Bitcoin’s value has remained above its average mining costs. In light of these findings, even if miners are placed under further pressure due to the increased network difficulty and the potential for a drop below their break-even point, it is essential to acknowledge that this might be an excellent buying opportunity if BTC can rebound later.
As things stand, Bitcoin’s value currently stands at $96K. Should bearish pressure persist, it could potentially fall to the range lows of $91K-$90K.
Source: https://ambcrypto.com/can-bitcoin-hold-on-to-90k-and-stop-miners-from-going-underwater/
