As Bitcoin price approaches $40,000 per coin and higher, sidelined market participants and even crypto bears will at some point start to consider that the bottom is in.
A signal has since appeared that is currently flawless at picking out when BTCUSD has built a strong enough base. Each time after moving away from this so-called “base,” Bitcoin blasted off to a massive bull run. Let’s take a closer look.
Bitcoin Production Cost Gives BTC A Base For Liftoff Bitcoin price is trading at $37,000 per coin, up more than double from lows set one year ago. Yet there are plenty of cryptocurrency investors who are fully expecting to see BTC at $10,000 or less in the near future.
At some point, these investors will be right, or have to change their stance. However, a fundamental signal has reappeared that has a perfect track record as picking out when the bottom is officially in.
The signal is Bitcoin price rising above the Production Cost tool created by BTC fundamental expert Charles Edwards of Capriole Investments. BTCUSD rising above the “Total” metric has always resulted in a massive bull market.
Will the KST cross bullish in December? | BTCUSD on TradingView.com BTUSD Base-Building: The Data Behind The Bull Run The first seen on the chart below occurred in 2017 prior to a 1,400% price increase. In 2019, however, BTCUSD tapped out with only 180% over the total metric. In 2020, BTCUSD pushed above it and saw another bullish impulse with a more substantial 370% gain.
The average of these three rallies results in a potential 650% increase. This puts Bitcoin closer to $300,000 per coin, which feels unrealistic. The median of the measurements is the 370% increase, which would put BTCUSD at a much more reasonable $175,000 per coin. Even on the lowest end of entries, a 180% from current levels would put the top cryptocurrency by market cap just above $100,000 per BTC.
Importantly, price action spent the longest time ever below Production Cost. Could this mean an even bigger base to launch the next bull market from? Only time will tell.
This content originally appeared in Issue 28 of CoinChartist VIP. Check out the rest of the issue here.
Satoshi Nakamoto Calls The Bottom Decades In Advance? Don’t believe it is possible that Bitcoin has bottomed above the Production Cost metric? Even Satoshi Nakamoto noticed this behavior in commodity-like assets.
“The price of any commodity tends to gravitate toward the production cost. If the price is below cost, then production slows down. If the price is above cost, profit can be made by generating and selling more. At the same time, the increased production would increase the difficulty, pushing the cost of generating towards the price,” Nakamoto is quoted as saying.
With a flawless track record in Bitcoin and a logical explanation for why this might occur, those unsure about what to do or expecting new lows might want to take note.
From Issue 28: #Bitcoin is above the Cost of Production after the longest time ever below it
Rising above has always lead to a bull run
Cost of Production indicator created by @caprioleio pic.twitter.com/zAUc8XcE0c
— Tony “The Bull” (@tonythebullBTC) November 26, 2023