Emphasis on the red dot. I would also like to hear some of your comments on this. Thanks.
Always interesting to be reminded of these market psychology - market state profiles, because no matter how many times we see these things, and recognise our own past errors in these schematics, we (or most of us), repeat the same old trader fails, time and time again.
I am not sure whether we can class Bitcoin as a commodity or a currency, but Bitcoin is similar to a commodity in that it has a clear cost of production. Commodities don't generally go much below the cost of production, because beneath a certain price point, it just isn't worth the producers effort to bring the commodity to the market place.
So what is the cost of producing Bitcoin? How much does it cost the miners, who maintain the whole network, to keep their mining farms switched on. That cost greatly varies, depending on who you are, where you are based, and what sort of deal you have with the power company. For miners who are currently in operation, that cost ranges anywhere between $150 - $300. Miners with a greater cost of production than that, would have been forced out the game during 2015, leaving the mining capacity in increasingly fewer hands (so much for decentralised money of freedom - lol). Indeed, it is entirely likely that the big Chinese Miners, deliberately pushed Bitcoin down into the dirt, where only they could breath, in order to shake off the 'weak' competition from their game. Perhaps not a lot unlike what is happening with oil prices today, with the US/West happy up to a point to 'tolerate' Saudi Arabia keeping the market flooded with oil, in order that enemies of Petrodollar hegemony are squeezed, with the idea of forcing them to capitulate thier hands in other key areas.
So, we have had an entire year, of Bitcoin being priced at near production levels, forcing all but the most large scale mining operations out of the game. And we have the halving event just 6 months or so down the road. We have had our 'price war', where the Chinese Bitcoin Cowboys have emerged has clear overall winners, with action on Chinese exchanges now dominating the whole market. With the average cost of production set to double, presuming that Bitcoin isn't going away anytime soon, what must by logical definition happen to the spot price of Bitcoin? Soon, $300 will be the very minimum cost of producing 1 BTC and generally, commodities trade at a premium to production costs.
I believe that there will be more scares to come, and that the $350 low will be breached, and panic selling will ensue. But as per your market pyschology/state diagram, there does indeed come a time, when the bottom is well and truly in and that bottom happened one year ago. What we have now, are the Chinese BTC Cabal, pumping n dumping, swishing coins around to sucker traders in, and then scare them back out of trades, and suck all their wealth from them. 'They' want as few filthy white foreign barbarians getting in on 'their' action at optimal prices as possible. 'They' want us to be buying in, chasing momentum which they will generate.
$650 BTC is a very logical target for many reasons, and whilst I suspect a lot of resitance around here, in the long run, I can see $800 Bitcoin, and perhaps even a spike up to $1000 BTC......but of course, it wouldn't surprise me at all to see $320 BTC in the coming week or two, and a whole lot of doom n gloom surrounding the move down there.
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