Cryptocurrency analyst James Van Straten suggests Bitcoin could maintain a value of $90k, indicating a potential local price bottom.
Impact of Hash Ribbon and Possible Bottom
Analyst James Van Straten points to the Hash Ribbon, an indicator that follows miner profitability and potential market exits, as a sign of possible miner distress and a likely bottom signal for Bitcoin. Historically, the Hash Ribbon has often signaled a good opportunity to buy, as it tends to align with the cryptocurrency’s lowest points. However, it remains to be seen whether this trend will continue.
$90k-$105k Price Range Defense
Van Straten also noted that despite an anticipated 4% increase in Bitcoin’s network difficulty on February 9, the cryptocurrency could still maintain a price range between $90k and $105k. Network difficulty, which currently stands at 110T units, determines the complexity of mining Bitcoin. A 4% increase would mean that miners need to use more computational resources to mine the cryptocurrency, thereby increasing average mining costs.
Bitcoin Mining Costs and Market Situation
According to MacroMicro data as of February 6, the average cost of mining Bitcoin was $86.5k. If Bitcoin’s price falls below this average cost, the average miner would be at a loss and face additional pressure. However, Bitcoin’s price has traditionally stayed above average mining costs. Therefore, even with the expected increase in difficulty and added pressure on miners, a drop below average production costs could present a buying opportunity if Bitcoin’s value rises again.
At the time of writing, Bitcoin was valued at $96k and could potentially fall to between $91k and $90k if bearish pressure continues.
