Bitcoin Bull Rally Incoming? Market Price Keeping Below the Production Cost Ahead of Halving

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Bitcoin is staying above its crucial level $9,000 for sometime now while experiencing some hiccups along the way that saw it a few paces below and above this line only to come back at $7k.

According to trader Crypto Michael, Bitcoin is still “indecisive” but could very well make a run for the highs back again. But that won’t be before we drop down towards $6,800-6,860. This area is where he will go long but losing this zone also means, “we’re seeing low $5ks.”

Bitcoin has been stagnant in the first half of April and we are currently up about 6% in the month so far. Now, it’s to be seen which way the price movement would play out in the second half.

“BTC The daily isn’t really super bearish, we should’ve closed below $7000 for that but it’s awfully close to how the $10k top played out. I’m still just chilling waiting for something more obvious,” said analyst DonAlt.

A 2,700% Bull Rally?

Meanwhile, Bitcoin is preparing for a big event in the form of reward halving which is less than a month away. And ahead of the third halving, the world’s leading cryptocurrency is trading below its production cost.

The Production Cost of Bitcoin is the global average US dollar cost of producing one bitcoin each day. Charles Edwards of Capriole Investments, a digital asset management firm, created this indicator that uses the primary cost of operations as a base form to estimate the cost.

“Bitcoin Production Cost is then found as (Daily Electrical Cost) / (Elec-to-Total Cost Ratio).”

Electricity is the major factor in Bitcoin mining operations but other costs including hardware capital expenditure, wages, rent, insurance, bandwidth, and cost of capital are also taken into account.

The market price of bitcoin trading below its production cost means it is unprofitable for miners to keep on mining bitcoin that would result in the exit of inefficient miners.

However, the silver lining is the last time it happened this near the halving, bitcoin price rallied 2,700%.

QE4 QH3 Face-Off

Already, the industry is expecting quantitative easing to act as rocket fuel for digital asset prices. The central banks all over the globe have their money printers running round the clock to inject liquidity into the market and bailout banks and corporates.

On the other hand, bitcoin is preparing for its quantitative hardening, halving that will cut block rewards in half from 12.5 BTC to 6.25 coins.

Interestingly, in 2013, the QE3 of $1.5 trillion coincided with the bitcoin’s bull market. And this time amidst the QE4, we are awaiting bitcoin’s QH3.

As we have reported, some of this newly minted money is making its way to the general population.

The US Federal Reserve is giving stimulus checks of $1,200 ($2,400 for married couples) and $500 per qualified child. Japan has also announced that it will offer a cash payment of up to 100,000 yen ($930) to every resident.

Now, some of this money has been making its way into Bitcoin.

https://twitter.com/brian_armstrong/status/1250907110730170370

With both retail buyers and institutional investors already jumping in to buy the dips and taking to long-term HODLig strategy, the interest in bitcoin continues to grow.

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