Following yesterday’s market turbulence that sent the cryptocurrency markets down towards their 2018 lows, Bitcoin appears to have established the $4,000 region as a level of support. Some analysts expect that the cost of mining may be playing a role in the current market conditions.
At the time of writing, Bitcoin is trading up over 3% at its current price of $4,000. Although its price has not yet responded bullishly to this price region, it has held as support for the past couple of days and may prove to be a significant support region in the future.
It is reasonable to assume that the primary price level to watch for over the coming days and weeks is $3,600, which is Bitcoin’s recently established 2018 low. When BTC first fell to this price in late-November, it rallied up to over $4,000 before drifting back down to these regions, at which time $3,600 sparked a relief rally (or a so-called “dead cat” bounce) that sent its price to highs of $4,400.
Many analysts have speculated that the increasing unprofitability of mining Bitcoin could be adversely affecting the markets, as some models suggest that the cost of mining one Bitcoin is currently $4,500, which is more expensive than the Bitcoin itself is worth.
However, data suggests that as Bitcoin’s price drifts lower, miners are actually seeing increasing mining profitability, despite still losing money.
While speaking to MarketWatch about the current cost of mining, Sam Doctor, the head of data science at Fundstrat Global Advisors, said that miners are getting some reprieve from the losses incurred from mining, due to a combination of more efficient mining devices and lower cryptocurrency prices.
“Our model suggests the cash cost of mining each BTC on the Antminer S9 is now $4,500, down from $5,300 in September… Depreciation expense has fallen to $1,300 vs. $2,000 in September, reflecting a lower rig cost as newer devices have come to market. Fully loaded breakeven is now $5,700, compared with a breakeven of $7,300 in September,” Doctor said.
Related Reading: Cryptocurrency Market Update: Real Recovery or Dead Cat Bounce?
Altcoins Trade Mixed Amidst Bitcoin Stability
Although Bitcoin has proven to be stable around the $4,000 region, the altcoin markets have experienced mixed trading over the past 24-hour trading period.
At the time of writing, Ethereum (ETH) is one of the best performing altcoins, trading up over 3% at its current price of $111. ETH is currently up over 11% from its 2018 lows and appears to have established the $110 region as a possible level of support.
Bitcoin Cash and EOS are two of the worst performing major altcoins today, trading down 3.3% and 4.4% respectively.
Bitcoin Cash is currently hovering right around its all-time lows, which were first breached in late-November when its price crashed below the $200 level. Although the markets have played a huge role in BCH’s poor performance, its downwards spiral was sparked by its hard fork event that occurred on November 15th.
EOS is currently just a hair above its 2018 low of $2.40 and is currently trading down 4.4% at its current price of $2.46. EOS is trading down significantly from its weekly highs of $3.36 and is down 57% from its one-month highs of $5.73.