[I posted this on 2/6 in the channel]
The content analysis debt is trending downwards for a while; back in April, many KOLs viewed the market as entering a downtrend and roughly illustrated it as shown. Currently, it continues to view two peaks similar to 2021, and the market is preparing to dive into a downtrend. I mentioned why it differs, and I might analyze it in more detail in another article.
OK, assuming the market enters a downtrend, where will the bottom be? The reality is that the bottoms of downtrend cycles are quite related to the mining costs of the miners, depending on many factors like machine types, electricity prices, difficulty (hashrate), halving... For example, the bottom of the downtrends in 2022 and 2023 had an average cost to mine 1 BTC hovering around $13k-$18k. When the price fell to $15k-$16k, a portion of miners started to incur losses, so rather than mining, they just bought directly on the exchange for convenience.
Currently, the average mining cost based on Macromicro is about $90k, which may not be very accurate, or it might be calculated based on mining prices in the USA. From my research, the average cost falls around $40k - $50k, not including equipment costs, maintenance, and personnel, indicating that a portion of miners will incur losses, and the bottom may be around this range.
Regarding technical analysis, there is a sideways zone of 8 months at $50k-$70k, which is strong support. If it really goes into a downtrend, it will drop down here, breaking under $50k + below EMA200/MA200 to sweep liquidity and create a bottom. In summary, if the market enters a downtrend at this point, there is a high probability that BTC will have a bottom around $40k-$50k.
Going deeper is very difficult because, besides miners incurring losses, there are many other factors. Remember that the average purchase cost of the current strategy is $70k, and many other organizations and companies are following suit, buying after entry points that are even higher. Since ETFs appeared until now, the net flow has continuously increased, and the estimated average purchase cost is also around $70k - $80k. Now dropping prices to $40k-$50k for retailers to buy, is it not an overly easy game + heavy on the market? Meanwhile, large funds, organizations, and whales are at higher entry levels? The amount of BTC on exchanges has reached an all-time low due to the dwindling supply.
In the context that retailers have lost trust in altcoins, now entering a downtrend, BTC at $40k-$50k will ensure retailers will buy full BTC, as alts will continue to decline, and somehow BTC will rise => is it that easy for the house to drive prices for everyone to buy? 🤣 Everything relies on technical analysis, fundamental analysis, psychology + mindset. That's why I viewed the market as not entering a downtrend back in February-March-April, BTC could still break the peak, and alts would at least push to a level that forces people to regain trust. The rest, we can only wait for time to respond 👍
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