Bitcoin (BTC) Holds Above $3,500 After Plunge, Hashrate Under Scrutiny
Bitcoin Hits $3,500, Then $4,100, Then $3,500 Again
Although optimists recently claimed that the worst was over for Bitcoin (BTC), on Monday morning, the crypto market continued to range in a tumultuous state, moving under $4,000 (yet again), after making a convincing bounce off $3,500 during Sunday’s Asian trading session.
At the time of writing, BTC has returned to just shy of $3,800 on Coinbase, but fell to as low as $3,500 during the wee hours of Monday morning as sell-side volume ramped up to multi-day highs.
Although this drawdown, the ~fifth of its kind in a week’s time, seemed overtly bearish, BTC actually held relatively strong at $3,500, a level of “light support” according to eToro’s Mati Greenspan.
Still, the fact of the matter was that BTC fell under $4,000 yet again, sparking concerns about lower lows and a multitude of underlying bearish catalysts in the crypto industry.
Chief at Cryptocompare, Charles Hayter, told CNBC that the cryptocurrency market’s most recent drawdown, which sent the aggregate value of all crypto assets plummeting below $120 billion, drew attention to Bitcoin’s tumultuous hashrate figure. He explained that due to the fact that the Bitcoin Network’s hashrate has seen a sharp decline, falling by 28% since early-November, the value of BTC has declined in correlation.
This sentiment is, of course, a reference to the long-standing thought process regarding Bitcoin’s break-even mining cost and its relation to price. Hayter acknowledged this, telling the aforementioned media outlet:
The idea is that the hash rate gives some idea of what underlying opex (operating expenses) and capital costs people are willing to utilize to generate bitcoin and give it a benchmark price.
However, some are saying that the relationship goes the other way, with critics of the theory noting that hashrate follows price, not the other way around.
Still, the fact of the matter is that hashrate and plummeting, and not only is this hash decline a rare sight, but one that may be detrimental for the short to mid-term prospects of Bitcoin and its altcoin brethren. Dovey Wan, a well-known Asian crypto entrepreneur, recently took to Twitter to touch on Bitcoin’s precarious mining situation, issuing the following image and message that painted a dismal picture for cryptocurrency miners.
Most updated footage – After BTC crashed blow $4000… miners in China are selling S7 for 5CNY per pound 🤣🤣🤣 pic.twitter.com/nV2Nk8lsLw
Although Wan’s video has been called fake by some, CoinDesk made a similar claim regarding mining, with the founder of F2Pool telling the source that an estimated 600,000 Bitcoin miners have closed up shop in the past two weeks alone, correlating with BTC’s foray under $6,000.
All Eyes On $3,000/BTC
And sadly, many have argued that BTC has yet to find its true bottom. As reported by Ethereum World News, the $3,000 level is a purported bottom that has been widely referenced by this industry’s leading analysts and commentators, which include Anthony Pompliano, Mati Greenspan, Michael Moro, along with dozens of others.
Speaking with CoinTelegraph, Anthony “Pomp” Pompliano, a partner at Morgan Creek Digital Assets, noted that the psychological argument points towards the fact that there hasn’t been enough pain yet, meaning that a true bottom/capitulation phase hasn’t been achieved yet. The Morgan Creek executive, an apparent hater of centralized financial institutions, then explained that from a technical standpoint, $3,000 to $4,000 per BTC is a likely possibility.
From a historical perspective, Pomp also explained that a $3,000 price bottom could also be logical, noting that historically, Bitcoin’s drawdowns have been 80%+, before adding that this year’s has ‘only’ been ~75%.
Keeping this in mind, $3,000, or an 85% decline from 2017’s all-time high, could be in Bitcoin’s short-term cards, so to speak. Vays closely echoed this sentiment, explaining that $3,000 is a price point to watch, telling CoinTelegraph viewers that once BTC reaches the $3,000 zone, it would be a good idea to start accumulating.