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Relationship Between Bitcoin Price and Mining Cost
Dominic Rizzo believes that investing in Bitcoin can be viewed through the lens of “investing in commodities.” He points out: “The trading price of Bitcoin is usually close to its mining cost; viewing it as a traditional commodity, this is often a good time to establish exposure to Bitcoin.” In traditional commodity investment, when mining costs are close to spot prices, it often signifies that prices are near the bottom, limiting downside risk. This is a contrarian investment strategy; when market sentiment is pessimistic, asset prices may have already reflected this sentiment, thus presenting potential investment opportunities. According to MacroMicro data, the current average mining cost of Bitcoin is approximately $84,770, while the spot price is around $87,000.
Meanwhile, cryptocurrency research institution 10x Research also pointed out in its latest report that the company’s bullish signals have been triggered, claiming that its signals have repeatedly helped users seize significant entry opportunities, indicating a relatively high accuracy of its signals.
However, CryptoQuant analyst Crazzyblockk maintains a relatively conservative stance in his latest analysis, stating that the short-term whale positions for Bitcoin have an average holding price of $91,000, while most highly active addresses have their holding costs roughly between $84,000 and $85,000.
Crazzyblockk warns: “If the Bitcoin price falls below this cost basis, it could trigger a sell-off, making the $84,000 to $85,000 range a critical liquidity zone.” Furthermore, Crazzyblockk points out that these on-chain cost basis levels represent a turning point in market sentiment, advising traders and investors to closely monitor price movements within these ranges to assess trend strength and potential reversal risks.