When it comes to Bitcoin (BTC), other than the seasonal bulls and bears, there are usually two kinds of investors, permabulls and permabears. The former believe that hodling Bitcoin (BTC) is the best thing to do and will not sell even in the face of a market meltdown. The latter on the other hand believes Bitcoin (BTC) is a scam and that it is going to fall down to zero sooner or later. A rare type of investor which would also be our ideal investor would be the one who weighs every aspect of an investment in an unbiased manner.
In the case of Bitcoin (BTC), an unbiased approach requires that both the best case and worst case scenarios be taken into consideration. As for the best case scenario, many do believe that if Bitcoin (BTC) continues to rise again past $20,000, it will reach a target closer to or higher than $50,000. However, in their optimism to see Bitcoin (BTC) prices reach those levels, most Bitcoin (BTC) maximalists often ignore an important part of risk management, which is analyzing the worst case scenario.
The chart above shows the worst case scenario for Bitcoin (BTC) with an absolute bottom target of $2,900. That would be the point at which the correction is massively overextended and crypto mining is not profitable in any way shape or form. Currently, mining may be profitable at different times as the number of miners switching their machines off rises, which lowers the competition and means more share of Bitcoin (BTC) for those that are mining. So, in that regard, it would be wrong to assume that Bitcoin (BTC) mining is no longer viable at $6,000 and that the price cannot go down. There are more than one variable at play here and as long as miners can find a way to keep their operations profitable, they have no problem with letting the prices slide.
If Bitcoin (BTC) were to reach a target of $2,900, that would happen before the end of the year. This puts us close to Bitmex’s CEO, Arthur Hayes’s prediction of $50,000 Bitcoin price by the end of the year. He also stated that Bitcoin (BTC) will found a bottom between $5,000 and $3,000. Whether or not the price will fall as low as $3,000 yet remains to be seen but it does appear improbable. Having said that, we believe that it is likely that BItcoin (BTC) will break market structure before the next run up; to give a false sense of an over extended correction. The price of Bitcoin (BTC) has reached a strong resistance at $6,332 levels and appears due for downward action for the next few days. It is likely that Bitcoin (BTC) will break market structure during this attempt at a correction. Long terms, the prospects might be brighter but short term, the market is dead tired of a very boring price action. Most people are already calling for a bear market ahead or a drop to $1,000 levels. This is usually accompanied by a reversal as Bitcoin (BTC) has been found to do well by contrarians. Regardless of the recent price action, if you believe in the long term potential of Bitcoin (BTC), then this correction should be seen as an opportunity to accumulate instead of a threat to the crypto market.