The Critical Importance of Bitcoin Reaching the $90K Price Level for Miner Sustainability Amid Escalating Expenses
Although the potential for Bitcoin miners to reach a breaking point remains high, analyst James Van Straten suggests that the cryptocurrency could stabilize and establish $90,000 as a crucial local price floor. He points to the Hash Ribbon indicator, a significant metric that monitors miner profitability and potential departures from the market, which has been activated.
This indicated a sense of distress among BTC miners and a probable signal of a price floor for Bitcoin based on past data. Van Straten remarked,
“The Hash Ribbon signaling miner capitulation, which typically signifies a market bottom, historically lasts approximately 30 days. The most recent occurrence was in October 2024.”
Historically, the hash ribbon indicator has often presented a buying opportunity coinciding with price bottoms for the cryptocurrency. Yet, will this pattern repeat itself?
Can the $90K price mark prevent Bitcoin miner capitulation?
Van Straten further mentioned that despite the anticipated 4% increase in Bitcoin’s network complexity on 9 February, the leading digital asset may still hold ground within the $90K to $105K price bracket.
“As the difficulty is forecasted to surge by 4% towards all-time highs this Sunday, placing more strain on miners, I am more confident that $90K will serve as the lower boundary for this range.”
For those unfamiliar, network complexity (currently standing at 110T units) refers to the level of difficulty miners face in discovering a new block to mine BTC. A 4% rise in network complexity implies that miners must allocate additional computational resources to mine the cryptocurrency, thereby escalating average mining expenses.
According to MacroMicro data as of 6 February, the average mining cost for BTC stood at $86.5K. Should the price of BTC descend below this average cost of production, it would push the average miner into a loss-making position and increase their financial pressure.
Throughout its history, Bitcoin’s price has consistently remained above the average mining costs. Hence, despite the impending rise in difficulty level and heightened chances of miners capitulating, a dip beneath the mean production costs could potentially present a strategic buying opportunity if Bitcoin’s price rallies in the future.
Having said that, as of the latest data, Bitcoin was valued at $96K, with the possibility of a decline to the lower spectrum of $90K-$91K if bearish sentiments prevail.