Bitcoin could also experience a sharp decline?

Janak9955

Over the past week, the cryptocurrency market has been quite lively. Bitcoin's price surged to over $64,000 at one point, marking a 22.9% increase, and its market value approached $1.25 trillion. However, according to the Financial Times citing analysis from JPMorgan Chase, Bitcoin's current price is significantly higher than its production cost, calling for vigilance against this unsustainable state of prices exceeding production costs. Those interested in getting involved should definitely take a look at this...



JPMorgan Chase's analysis indicates that Bitcoin's production cost is approximately $27,000, primarily consisting of electricity costs during the mining process. This cost provides support for the price of Bitcoin, but with the next Bitcoin halving approaching, production costs are expected to temporarily jump to around $50,000. The Financial Times believes that the recent surge in Bitcoin prices has pushed it far above its production cost, making this situation unsustainable for Bitcoin as it has been in the past.

After the Bitcoin halving, inefficient miners may exit the market, leading to a decrease in computational power and consequently reducing production costs. The Financial Times article suggests that the upward pressure on prices will lose momentum, and the decrease in mining processing capacity will correspondingly reduce production costs to around $43,000, providing a new support level for prices after the current frenzy. In essence, the Financial Times analysis suggests that Bitcoin's price is unlikely to remain above mining costs in the long term.

However, historical data shows that the last time Bitcoin's price approached or fell below mining costs was during the bear market bottom in 2022, leading to the closure of many mining companies. But during bull market cycles, Bitcoin prices typically exceed mining costs. While mining costs indeed serve as a robust price support, using this to predict Bitcoin's pullback seems somewhat weak.

Overall, although the Financial Times warns that Bitcoin's price may be unsustainable, bullish sentiments still exist in the market. Based on historical trends, during the last bull market cycle, Bitcoin prices usually surpassed mining costs. Therefore, maintaining a cautious optimism about future developments might be more appropriate. In reality, like the stock market, cryptocurrencies experience both rises and falls, and Bitcoin will also have its down days. Whether it will experience a sharp decline, and when it might happen, will only be proven over time...

Samiksha

The future of Bitcoin remains uncertain, and historical trends suggest cautious optimism might be more appropriate.

Ritu77

Market risks are inevitable; staying calm and looking at investments from multiple angles is crucial.

Iravan774

Only by doing more research and keeping a close eye on Bitcoin's movements daily can one avoid losses during major declines. Those investing in Bitcoin should pay extra attention.

977Iti

Perhaps there might be a breakthrough above $70,000 around the middle or end of the month, followed by a slight decline. After all, halving situations can result in some losses, but not significant ones.

Jayne94133

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