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Relationship Between Bitcoin Price and Mining Costs
Dominic Rizzo believes that investing in Bitcoin can be viewed through the lens of “commodity investment thinking.” He points out: “The trading price of Bitcoin is often close to its mining cost, and viewing it as a traditional commodity usually presents a good opportunity to establish Bitcoin exposure.” In traditional commodity investment, when mining costs are close to spot prices, it often indicates that prices are near the bottom, with limited downside risk. This is a contrarian investment strategy; when market sentiment is pessimistic, asset prices may have already reflected this sentiment, thereby presenting potential investment opportunities. According to data from MacroMicro, the average mining cost of Bitcoin is currently around $84,770, while the spot price is approximately $87,000.
Meanwhile, cryptocurrency research firm 10x Research also pointed out in its latest report that the company’s bullish signals have been triggered, claiming that these signals have previously helped users capture significant entry opportunities, suggesting a relatively high accuracy of their signals.
However, CryptoQuant analyst Crazzyblockk maintains a relatively conservative stance in his latest analysis, stating that the average holding price of short-term whales in Bitcoin is $91,000, while the holding costs of most highly active addresses fall 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 area.” Additionally, Crazzyblockk points out that these on-chain cost basis levels represent turning points in market sentiment, and traders and investors should closely monitor price movements within these ranges to assess trend strength and potential reversal risks.
