What may need to happen for the price of Bitcoin to bottom

in bitcoin •  3 months ago

Bitcoin has been trending lower all year, and it may not be done yet.

If you bought bitcoin almost at any point in the last 8 months you are likely down on your money.

In fact, if you bought bitcoin just about at any point in 2018, you are likely down on your money:

If you were one of the lucky few that picked it up around $6k, you might be up a few ticks, but not much.

Not out of the woods yet?

According to the CEO of Bitmex, we still need to see something happen with Bitcoin that we haven't seen yet in order for it to bottom.

Arthur Hayes, the CEO of Bitmex, says that in order for Bitcoin to bottom it first needs to flush out the miners.

Prices need to get to a point where Bitcoin miners start turning off their machines and the difficulty rate on Bitcoin actually decreases.

(Source: https://chaining.ru/2018/08/26/bitcoin-mining-now-consumes-1-of-the-world-s-electricity-more-than-the-entire-state-of-new-york/)

In the past it was believed that hashrate preceded price, but perhaps it is price that precedes hashrate.

Why does Hayes think this needs to happen?

Mostly because that is what happened before.

In the bear market of 2014-2015, miners turned off their machines and several high profile miners actually went under.

The difficulty rate even decreased for a short time.

Then, 7 months later, after a prolonged period of sideways movement, prices began rising again.

Hayes says we likely need to see something like that happen again for a real bottom to be in place.

That begs the question, at what price do miners turn off their machines?

The answer to that question likely depends on where you live.

According to Hayes we should look to China.

The average electricity cost of Chinese miners all-in is roughly 6 to 7 cents kWh. That would indicate that at $5,000 bitcoin, miners would start looking for cheaper places to operate.

However, to get them to shut off their machines completely and close shop, we would likely need to see prices in the $3,000-$4,000 range.

Then the key he would be looking for is seeing if hash rates actually drop.

At that point he says a real bottom can be put in place and we can start building a base for the next leg higher.

(Source: https://medium.com/@brettking/bitcoin-more-electricity-consumption-than-the-entire-planet-abc61b2ab49a)

*Keep in mind that something like the SEC approving a Bitcoin ETF would likely throw his theory out the window.

More from Arthur Hayes can be found here:

https://us3.campaign-archive.com/?e=745c258920&u=db45c09bdf20e1866bb32123f&id=1da0bd867e

Stay informed my friends.

Image Source:

https://www.ccn.com/how-the-efforts-of-bakkt-could-lead-to-the-approval-of-the-first-bitcoin-etf/

Follow me: @jrcornel

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Excellent content @jcornel 😁👍😁

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Thanks.

And people were talking about 50.000 US by the end of 2018...

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They aren't wrong yet. :)

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True but I really don't see another bull run like the one last year happening this year...

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It seems pretty unlikely, but keep in mind that Bitcoin was around $6,500 on November 13th, and hit $19,500 by December 17th. Which means it only took about 34 days for bitcoin to reach it's highs from where it currently is today...

Not saying I expect that, but I am saying it's possible because it has been done before. :)

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Possible but highly unlikely

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maybe it will..

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It only took about 34 days for bitcoin to go from $6,500 to $19,500 last year. In that regard there is still plenty of time.

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Personally I'm convinced we've hit a bottom and like a spring that has been compressed too tightly; #BTC will snap and we are about to see the largest bull run and an ATH of $25K+ transitioning towards mid Q4

especially around the holidays...

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That is certainly possible and what I am hoping for as well.

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That is certainly
Possible and what I am
Hoping for as well.

                 - jrcornel


I'm a bot. I detect haiku.

@jrcornel what do you thing ,what is the top bottom in this year ?

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Honestly I would not be shocked to see $5k. I would also not be surprised to see the bottom already be in.

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so it's already in bottom or may be down more, but definitely when it will rise it will be touch all time high, what's your opinion @jrcornel

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That is my thoughts yes. But there is no guarantee.

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Yes no one can guarantee of it's exact price

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When btc hovered at 5800 usd I was hesitant to call a bottom. It was too brief. However there was consolidation and then a bounce. Then now...

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It's increasing now, maybe one again it will down then started rising

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I see no sign of a sustained run. A breach of the 50SMA is what I want to see and even then this wouldn't mean we've bottomed.

Then I need seriously advice from you 😧 should I buy bitcoin now or just wait to get its position in higher again in the currency market??

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I wish I knew. My best advice is to buy half now and then if it does dip you buy the other half then. Either way you atleast have some money in.

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buy now and wait.

I HOPE THAT THE BEST OF BITCOIN

I say we will see a long sideways move before finding that bottom... we have already seen companies turning off cloud mining contracts but do they shut down the machines? I think not so it will require as you said for some of those major players to close shop before we see a correction.... we may very well see a shift away from BTC dominance prior to the next bull run

Posted using Partiko iOS

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Its a shame most of the break even prices were said to be around $8k globally. Now finding out the largest miner's breakeven price is a lot cheaper than that.

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Yea I have been wondering about the comparison between BTC and BCH same group of miners can do either so will the switch play into the problem or defeat the problem... giant balancing act and I feel as if many larger players are wising up to control markets stopping they bull run mentality in its tracks realizing the potential for capital gains by having competition get flushed out through the lull

Posted using Partiko iOS

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They may switch but likely neither would be profitable if the prices keep dropping.

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True that, yet I don’t see a complete crash anywhere in the near future with so many options for movement and with last year’s big bump some must be using those profits in preparation to endure... I’m still bullish been buying and investing in STEEM the whole way down after riding it up and taking profits myself

Posted using Partiko iOS

What are you thinking about bitcoin currency in this year

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I think it will go up again at some point.

etf works for cheaper prices ... I hope they shut down those damn miners lol I mean I want a cheap bitcoin..

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How cheap are you looking for?

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at least 3K

It's definitely possible, but might have been a coincidence. I expect the price to continue to stay around where we are right now at least for the next 6 months or so.

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That is a long time. Not that much different than what others are saying either.

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By when?

That is a possible scenario. I think the ETF will play a bigger role though. Plus a lot of people lost some significant money so it is going to take some time to find new buyers or for those prior investors to give crypto another chance. I would expect some sideways movement for the rest of 2018.

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I could see that. Hayes said if the physical ETF gets approved, it's new highs for btc.

I don't know if this scenario will happen again. Not with what's going on in this market lately. I searched on the internet, out of curiosity, what it costs to mine one BTC in different countries and here is what I found. You'll need to enlarge the image, sorry for that.

Click here to enlarge the image


image source

So there are a lot of countries where you could mine a Bitcoin under 5000$, even under 3000$.. China 3172$!! And I believe that, due to the adoption, the miners will migrate for their own interest.

As usual, thanks for the info.
Cheers!

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Yea I've seen that chart. The data from Hayes came from talking to one of the large miners personally and those were the numbers said to him.

Have you noticed when Author Hayes said that, everyone started to put shorts in bitmex? Hmmm, interesting times 😂

Posted using Partiko iOS

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I did. Bitmex has tons of influence on the price of bitcoin now.

Awesome analysis. Even at $3000 I don't think miners will shut down their machines, they will probably go with the loses for a while anyway.

Hope we don't reach that stage though!

Posted using Partiko Android

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That is probably true for many of them. They spent a lot of money setting up and will be forced to run no matter the price.

Not Stable means financialy Not Safe, this is the case for all cryptocurencies, that's why we should be cautious about buying and trading for the sake of investment or as many say buy low sell high, so as for bitcoin no one can predict its bottom

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Nope, but it's fun to try!

It's depreciating, but there's going to be an appreciation soon🔥Follow back @cutymeni

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That's the hope

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This has nothing to do with why prices go up and down in markets. Just because it happened that way last time doesn't mean the two have anything to do with one another. If there were some other reason why the two are connected, I'm all ears, but I'm not seeing it.

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While true, there are often patterns in price action. They rarely repeat exactly, but they often rhyme. :)

The company I work for has ties with Chinese mining farms... Few months ago they evaluated coins using Cryptonight Light Variant 1, because it can be easily mined with big Xeon clusters (around 80 Xeon cores). They publicly asked us not to switch to Variant 2, but due to current configuration causing network instability our coin needs to sooner than later forbid mining empty blocks to avoid network stalls caused by very short block times.

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What company do you work for?

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It's a pretty new company based in Sardinia, Italy that develops payment systems for online shops.

Still lot to happen and the upcoming months i guess will decide the fate for the bitcoin and if nothing happens as expected lot of trust will be broken on it

I wonder what explanation Hayes would give for why that would be the case. May have just been a coincidence last time...

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My guess is that miners represent sellers. If miners stop mining, less selling pressure?! That would be my guess.

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Well, if difficulty goes down, it doesn't mean that fewer new BTC are mined; the block rewards are always the same (12.5 BTC), so that can't really be an explanation.

Maybe (but this probably won't make for a big enough explanation) it is because miners would need to actually cash their BTC to pay for OPEX, and they would have to cash a smaller percentage if costs are lower...

Posted using Partiko Android

Interesting theory that is often applied to traditional commodities. I think there may be some validity but from what I've seen here in China, most miners have moved their operations due to the government.

I wonder how long we would need to stay below break-even mining price to see miners pull out.

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Probably a few months as many of them likely would keep operating at a loss hoping for prices to recover, especially since they may have sunk a lot of money upfront building the mining operation. My guess would be months?

I'm a newbie, so I'm just here to learn, but I'm hopeful that things will spike again.