Bitcoin (BTC) traders and analysts have conflicting views on whether or not the cryptocurrency has reached its bottom. While some believe that the recent drop to $17,600 was the capitulation move that marks the market bottom, others argue that the price is still in a clear downtrend. To gain more insight into the situation, Cointelegraph spoke with Rich Ferolo of Blockware Solutions and Will Szamosszegi of Sazmining Inc.
Szamosszegi recommends a dollar-cost-averaging strategy for investing in Bitcoin, as the cryptocurrency has experienced larger drawdowns in the past and has always made gains over any four-year period. Ferolo explains that the price of Bitcoin is currently trading below the realized price and miners’ cost of production. However, he notes that different generations of mining machines have different breakeven prices, and newer, more efficient machines can still be profitable even as the hash rate and difficulty decrease.
Ferolo also highlights the importance of infrastructure in the mining industry and predicts that there will be a lot of capitulation, insolvency, and excess machines in the coming months. He believes that there is a severe lack of infrastructure in the space and that bigger players may consolidate and buy miners at a discount. Szamosszegi adds that the hashrate decline following a price drawdown is a normal occurrence in the Bitcoin ecosystem and that mining will become more competitive in the next six months.
When it comes to starting a mining operation, Ferolo advises against setting up infrastructure at scale unless you have a significant amount of capital. He suggests diversifying investments between machines and spot BTC and considering hosting options for smaller investments. Szamosszegi explains that the $10,000 to $40,000 price range is more suitable for at-home mining, while larger investments require a significant amount of power and infrastructure.
Both experts agree that the fundamentals of Bitcoin are unchanged, despite the recent price drop. They believe that the industry will learn from this crash and become more cautious in terms of leverage and yields. They also discuss the upcoming reward halving and how it may induce miner capitulation but also wash out inefficiencies in the mining industry.
Overall, the experts provide valuable insights into the current state of the Bitcoin mining industry and how it may impact market sentiment in the future. However, they caution that it is difficult to predict the bottom of the market and recommend a long-term investment strategy rather than trying to time the market.