A refutation of the $6400 Bitcoin miner bottom

2020년 1월 16일

So, are you ready for this beauty ?



I am aware of filbfilb's economics of Bitcoin cycles, a very famous and thorough analysis of how the halving influences the Bitcoin price as a function of miner's anticipation of their revenue cut in half for the same cost of production. However, I disagree with the premises and the $6400 miner bottom. Miners are not the only sellers on the market. Production cost is a function of hash rate. Hash rate is a function of miner optimism, which is a function of price, which is a function of market sentiment, which is a function of chart aspect, which is a function of visual representation and its geometrical proportions in relation to the brain's perceptual cortex.
If people don't like the way the chart looks, they will not buy and thus demand will drop . Simple as that. It won't matter that halving would have reduced the supply, people will not buy if the geometry of price action looks bearish and so demand won't be there to cover miners. What that means for miners: at some point after the halving, they'll have initial production cost above market price, which will cause many to go bankrupt, hash rate will drop , difficulty will drop in response and remaining miners will regain profitability again. Equilibrium restored below $6400.

Until next time...