Key Points
- Analyst James Van Straten suggests Bitcoin could hold at $90k, marking a possible bottom for the cryptocurrency.
- Despite increased mining difficulty, Bitcoin’s price is expected to stay above its average mining costs.
James Van Straten, a cryptocurrency analyst, has indicated that Bitcoin could potentially maintain a value of $90k, which would signify a local price bottom. He 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.
Bitcoin’s Potential Defense of $90k-$105k Price Range
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.
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.
