Bitcoin’s price has drawn a barrage of speculation from market insiders and analysts over the past few weeks, as most of them have tried to give reasons for the prices rally and the increased interest in it.
Many parties did attribute the rise to macroeconomic forces, but as the price moves deeper and deeper below the $10,000 mark, the concern has suddenly shifted into how it can be sustained and avoid a scenario akin to that of mid-2018.
A new analyst, however, seems to believe that miners, as well as their innate desire to maximize profits as much as they can, hold the key to surviving this slide.
In a Bitcoin price analysis, popular market commentator Filb Filb detailed the control that the miners have on the cryptocurrency market, while adding that they will be largely motivated to maximize their earnings as the 2020 Bitcoin reward halving draws nearer.
In his analyst, Filb Filb details that Bitcoin won’t see any more lows until 2020, as miners will be looking to make as much money as they possibly can. To him, these miners control the market clearly.
To prove his point, the analyst reminded readers that there is always a propensity for commodity costs to gravitate to production costs. He claimed that miners would want to sell their coins to retail and Bitcoin trading investors at the point where revenue trumps cost per unit (in this case, mining costs)
Filb Filb also explained that miners are currently hedging down on future production, especially since the marginal cost of unit production is still low. He further theorized that miners have been scaling back on selling before the halving, in a bid to create a new halving bubble. The bubble will lead to a shortage, and thus, the perfect opportunity for them to make sales and maximize profits when the halving comes around.
The premise does make sense. Historically, Bitcoin goes on a rally after a halving occurs, and this pretty much means that sellers will have their pick of the market. Essentially, miners will be looking to ramp up their activities and hold Bitcoin in preparation for the halving. When it comes and goes, their abundant holdings, as well as the general hunger for Bitcoin that is expected to be seen on cryptocurrency exchanges and other asset custodian platforms, will create the perfect situation for them.
However, it is also worth remembering that this holding action will only be beneficial for as long as Bitcoin remains profitable to mine, and there are a host of other factors that can determine the price of the asset over time.
The introduction of Facebook’s Libra stablecoin seems to have hurt Bitcoin to a considerable extent, with many drawing comparisons between the two assets and looking for significant areas of divergence. There’s also the constant attacks fro the American president, who recently claimed via Twitter that he’s not so much a fan of the asset.
It will be interesting to see if Filb Filb’s analysis would be right, and whether miners, in their bid to ensure self-preservation, would be able to keep Bitcoin from going down the road of 2018’s bear market.