What will happen once Bitcoin reaches $3,500?
November 27, 2018 @ 18:26 UTC
A sweeping correction of the cryptocurrency market continues. BTC has fallen by almost 8% in the last 24 hours and is currently trading below $3,700. The benchmark price for the cryptocurrency proved to be under $3,500 at which point it received support, as predicted. The cryptocurrency made a rebound to $4,000, which indicated the beginning of a new increase but nevertheless a rather weak support which may in turn prologue a further decline. The crypto market capitalization fell by $86 billion, a decrease of 40%.
At the moment, the market is going through a hard time and we are trying to figure out whether Bitcoin will reach the bottom, or whether it will bounce back? The biggest BTC wallets have not moved their funds. The crypto community associates the current market decline with the Wall Street interest, but in fact, no actions of the “financial sharks” could justify the price collapse.
It is worth paying attention to the market behaviour near $3,500. This is an area that saw drastic increase back in September 2017, so technical analysis urges us to track the price dynamics near these levels. Mining in some regions of the world is becoming unprofitable, and thus many mining capacities are being pulled out of operation. In the future, market forces will aid miners to balance the supply and demand of the hashing power, but in the short term decreasing mining power may be a good signal for the market.
Achieving a previous turning point may put a stop to the cryptocurrency’s plunge. If the decline falls to levels below $3,400, then it will be difficult to stop BTC from falling to $2,750, which is the next important technical level. Nevertheless, we cannot exclude the scenario that BTC’s plunge will not stagnate for a considerable amount of time: the rebound may happen after months or even years.
While the market is closely monitoring the cryptocurrency’s price changes, some structural technological changes are taking place “behind the scenes”. The fall in the cryptocurrency’s price leads to the shutdown of a large number of ASIC miners in China, since according to F2pool about 800,000 ASICs have now been disabled. Meanwhile, unprofitable and outdated ASIC models were switched-off, but it is easy to guess that further price decline will lead to the shutdown of more advanced devices as well.
A similar situation occurs with other mineable cryptocurrencies. Due to major price declines, GPU mining hardly pays for the electricity spent on network support. Eventually, the blockchains will adjust to the hashrate drawdown, however, a continued decline of prices may lead to a massive shutdown of devices. In turn, this may lead to an increase in commissions, as well as, in the case of a massive sell-off, to a large pool of unconfirmed transactions.