Who would have thought that bitcoin that traded at $19000 would be as low as $8299. However, meteoritic rises are being predicted by bitcoin enthusiast like the guys from Fundstrat from their executive summary.
Though this forecast was strongly opposed by Samson Mow, chief strategy officer of blockstream.
In his words, he said that Fundstrat prediction was based on the Labour theory of value, a theory popular with the Marxist economist. This theory has however been abandoned for the Subjective Valuation theory, which explains that the price of goods or services is whatever people are ready to pay for it, not minding how hard it was to produce it. Samson Mows' view may pave way for us to see how the price of bitcoin would be looking in the future. Price of goods or services is what people would pay to get it.
What if a producers(miners) value the effort they put into producing goods or services more than the price the getting, what happens? The stop producing it.
Thus when price falls, marginal miners would drop out. Nevertheless, the bullish breakout for bitcoin maybe hindered by The blockchain itself or how it works. Below is a chart showing bitcoin hashrate and bitcoin price.
This chart shows the complexity of cryptocurrency(bitcoin) mining. The increase in hashrate seen means that bitcoin is still profitable enough for some players to stay put, this is also supported by mining pools, as more and more marginal miners are still in play.
The mining principle, increase in difficulty of the calculation needed to be solved was instituted in order to limit supply and dominance in the hand of a few miners. there are no few miners today!
The following comments supports this:
There are still major expansions happening, especially from more efficient miners ... the expansion is so big that it compensated for the drop-out of not-so-efficient miners
Marco Streng, CEO of Genesis mining
The increased hashrate means people are here for the long term because they are happy to just accumulate what they have....
David Sapper, chief operating officer at cryptocurrency exchange block bid PTY Ltd
The efficiency of the hardware is rapidly increasing and cost are coming down
Christopher Bendiksen, coinbase researcher
But again, marginal miners dropping out would cause another series of problem: 51% attack, double spending, 34% attack. seriously we can live we that if it would save the price of our beloved bitcoin
Another factor that adds to the complexity of the bitcoin market is that unlike commodities that would still be traded if mining ceases, bitcoin does not have that luxury. Bitcoin mining is not just bitcoin production but verification, without which bitcoin can not be bought, sold, earned or moved. thus if mining profit fell to zero, so would the value of all existing bitcoin.
So in my view. bitcoins bumpy ride would continue. A statistical analysis of bitcoin rate is not just enough in terms of predicting future tremendous increase in price, of its clear that bitcoin has a major support at $6000, and its forming an ascending trianlgle, but thats it. where is the data on the left of the triangle.
Sticking to the fundamental would give us a clear view of what is needed to fall in place. Factors i would say includes. reducing hashrate(that is basic supply and demand), cutting out more marginal producers-putting mining ability in the hands of a few. A scarce product is an invaluable product literally.