The daily trading volume went down from 350K to 300K, marking a 14% decrease. This figure is still better than that of last year around the same time, which saw a decrease of 20%. This might suggest that we are seeing a temporary bounce in the price of Bitcoin in the short term. The daily trading volume has been on a slow increase since February 2018 however, it has been dropping steadily in the past two months. The hash rate for Bitcoin has decreased over the past week and it is now at 90EH/s. The bottom of Bitcoin is correlated to the “shutdown price” for most mining rigs. Does this mean that the price of Bitcoin has hit rock bottom? We’ll explore it in this article.
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In our analysis this week, we predicted that Bitcoin would see a significant price adjustment and experts forecasted that the momentary relief may not last the next two weeks. Bitcoin’s price is now down by 1.5% in the past 24 hours and, at the time of this report, was trading at $8,460. Our prediction was correct as we see the price and trading volumes are both dropping steadily.
Based on the current difficulty of Bitcoin mining and the rate of electricity at 0.35 yuan, two of the well-known mining rigs – Whatsminer M3 and Avalon A741 have reached their shutdown price. As for other major mining rigs, their shutdown prices have risen compared to those last year. Therefore, the price of Bitcoin is, in our opinion, definitely not at the bottom yet. Filbfilb, a popular analyst on Tradingview, predicted that the shutdown price of this round is $7531, $6352 and $3172 based on the analysis of candlestick chart. Certainly, if Bitcoin prices continue to drop, more mining rigs will reach their own shut down price.
Apart from the trading volume, there has been a sharp decrease in another key figure last week: Looking at the past-30 day Google search trends for “Bitcoin” and related terms, it has been observed that the global search for “BTC” has reached a record low.
Compared to the last two years, there has been more short-selling than ever before, and investors who sell short believe the price of the stock will decrease in value. In the market of contracts, the total positions of long and short are equal. For each long position, there is a short position. However, a high long/short position ratio indicates that there are fewer people who wish to go long compared to short. According to past experience, if the ratio is too high it is highly likely that we will see yet another market correction. Current market conditions indicate the long/short ratio has dropped below one.
In conclusion, all fundamental indices have shown no signs of recovery. One good marker is that the daily trading volume has not dropped below the lowest expectations. This may only be temporary relief for indications that Bitcoin may hit rock bottom in the near future. Judging from other long-term indices such as hash rate, Bitcoin has not reached its bottom price. The price may hit a record low after the re-bounce. Investors need to be careful if they want to buy the bottom. Bitcoin’s halving of 2020 promises a bright future for Bitcoin, but to reach that future there are obstacles to overcome first. For now, it is recommended that traders hold their positions and not rush to buy the bottom.
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