Bitcoin’s parabolic rally of 2019 is now a thing of the past, and what lies ahead is anyone’s best guess. Crypto analysts are divided, with some calling a quick return to a bull market, while more bearish investors believe that Bitcoin has more to fall and will look for a bottom lower.
However, a formula used to determine the bear market bottom at $3,150 may provide the most accurate prediction for where the bottom of the current downtrend may be, and it coincides once again with the cost of production for Bitcoin miners.
Calling the Bear Market Bottom: Miner Production Cost Was Unbreakable
A new discussion thread is taking crypto Twitter by storm, and it is centered around a particular crypto analyst, his 12-months in advance call of Bitcoin’s bear market bottom, and the data set he used to determine that number.
Related Reading | Crypto Market Death Cross Inches Closer, Will The Bear Market Return?
The crypto analyst goes by the name of FilbFilb, and on December 4, 2017, he suggested that Bitcoin’s bottom would be either $2,000, or $3,000, but would “lean towards” $3,000. Bitcoin’s bottom was $3,150 on many top exchanges.
$BTC: WHAT HAPPENS NEXT
1/ @filbfilb called BTC’s bear market bottom 12 months in advance — before the bull market even finished!
His words on Dec 4, 2017: “I would lean towards 3k”.
His take on what comes next (and why) is fascinating. https://t.co/WkcsvReFzo pic.twitter.com/Dk04zLl9lm
— Cole Garner (@ColeGarnerBTC) October 9, 2019
But where did that number come from? And how was it so accurate? The answer is in production costs. Even Satoshi Nakamoto, the mysterious, pseudonymous creator of Bitcoin, said that “the price of any commodity tends to gravitate toward the product cost.”
The production cost for the average Bitcoin miner to produce each BTC, was roughly $3,170 around March 2018. The theory is that much of the selling pressure in the crypto market comes from miners who are ferociously churning out new Bitcoins with each mathematical puzzle they solve.
8/ Production cost doubles when the block reward halves. That makes $6340 the new floor.
Smart money knows it, again. Retail has no clue, again.
(Lots of longs in the right place, for the wrong reasons).https://t.co/elkSTCYDUw
— Cole Garner (@ColeGarnerBTC) October 9, 2019
But things have since changed. The production cost has only increased slightly, however, the absolute bottom price of Bitcoin will have to change around the halving. Each Bitcoin halving cuts the reward miner receive in BTC in half. This causes production costs to double overnight. Top Bitcoin mining farms know this, and have already priced the doubled cost production into their “bottom line.”
That puts the new bottom, according to this theory, at roughly $6,340. Interestingly, targets from Bitcoin’s triangle formation also match up this range as a possible bottom target – and also acted as support during most of the bear market, until the true bottom was set.
Related Reading | Bitcoin Forming Continuation Triangle From ATH, $50K+ Target
The analyst breaking down this data, step by step, says that each new bull market is “preceded by a terminal shakeout” or a “higher timeframe stop run,” before going on a parabolic rally. The current price action, the analyst suggests, is just that, and is healthy for Bitcoin long-term. Because of this potential bottom zone, anywhere from $6,400 to $7,500 is considered a “great buyzone.”
The post Bitcoin Correction Bottom Target Is $6,000, Coincides With Production Cost appeared first on NewsBTC.