Financial Times Article: "Why Bitcoin Prices Could Still Crash"

Ritu13

On March 1st, according to a report from the Financial Times, Bitcoin prices reached a new record high against many currencies.

The news of the approval of a Bitcoin spot ETF in the United States has fueled market enthusiasm. Anticipation of Bitcoin mining rewards halving by the end of April has intensified market frenzy. The expectation of increased demand from buyers for the next halving explains why the cryptocurrency bull market is now optimistically predicting that Bitcoin prices will soon exceed $100,000.

Upon closer inspection, this bullish target seems somewhat suspicious. According to estimates from JPMorgan, the current production cost—mainly the electricity cost for mining calculations—is around $27,000. This sets a price floor for Bitcoin. After the halving, this price is expected to surge to about $50,000 in the short term.

However, the recent surge has pushed Bitcoin prices far above the production cost. This situation is unsustainable for Bitcoin. Furthermore, these costs should start to decline shortly after the halving, as inefficient miners will exit the market unable to keep up the pace. As old machines are phased out, the hash rate should decrease, and production costs should subsequently decrease. At some point, the momentum of price increases will weaken. Assuming mining processing capacity decreases by one-fifth, production costs should correspondingly decrease to around $43,000.

Yamini003

Do we even need to ask why? Where there's a rise, there's inevitably a fall.

Nimmi373

Anyway, there's definitely going to be a time for a fall, right?

Pooja193

Whether there will be a crash is also hard to say.