This week has been a nightmare for Bitcoin investors who are already stressed by the negative price action. On Saturday, Bitcoin opens the doors for a potentially new bottom after falling to $19,000. Meanwhile, new BTC mining data support the same sentiment.
Bitcoin price drops below mining costs
Meanwhile, this new price level means breaking the norm in various ways. The current price of around $19,393 is well below the 2020 ATH of $19,700. Also, the 200-week moving average was breached by this price action.
Recent data shows that the current price of BTC is closer to mining expenditures. This means that it is more difficult for small-scale miners to continue mining. This also sheds more light on the true value of Bitcoin in the current scenario. Doctor Profit, a Bitcoin analyst, describes the situation as unsustainable for average miners:
Bitcoin is currently trading below the cost of production level. Not sustainable for the average miner. They pay more than they earn.
How will this affect miners?
But more importantly, it is said that this could be a clear sign of finding the Bitcoin base. While it is not clear exactly when the Bitcoin price may return, historical data is showing positive results.
The situation directly affects mining activity as fewer miners will continue mining if the Bitcoin price drops. Similarly, more BTC miners will come into play if the price goes up. This means more returns from mining.
At what levels will Bitcoin find a bottom?
Analysts explained that whenever Bitcoin drops below its production price, it simultaneously marks the bottom for each cycle. Examples of this behavior have been witnessed before, in January and November of 2017, and most recently a collapse caused by the pandemic situation.
Additionally, recent data from analytics site Glassnode revealed that the revenue generated by BTC miners continues to decline. With mining spending rising and the overall macro scenario worsening, miners are now less encouraged.
Investors are waiting for Bitcoin to react at $20,000
As we have included in the analysis of Kriptokoin.com , the BTC price is taking a serious hit for the third time in the last 12 years. The leading crypto has fallen below its four-year trend for the third time in history. The market last witnessed this during the bear market in 2015. The other was March 2020, when COVID-19 caused an economic crash around the world that led to the liquidation of Bitcoin. As a result, investors should not lose hope. BTC has managed to recover from similar dips before.
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