The best indicator: No TA, just the Production Cost of one Bitcoin has been perfect to call every bottom.

There has been a try to search for the “perfect“ indicator to look for every bottom on the higher time-frame. Mostly with no success as especially this bear market showed how nearly every TA indictor has been broken at a certain point as the markets were just too volatile for them, switching them up with every second candle and thus the do not give any “good“ predictions to where we could be right now in market phases.

But if there is one thing that is always consistent with Bitcoin and a crucial indictor on what state the market and its participators may be in right now is the: Production Cost of one Bitcoin.

The miners are very deeply connected to every move that BTC does as their whole revenue depends on it. So it is obvious that if the price is at the same level of the production cost for 1 BTC, it is very low and being too long on this level would very quickly put many miners out of business.

Chart from Charles Edwards on Twitter

Here we can see that Production Cost as the red line. Every time BTC price went below the cost of producing one BTC, it has been very short-lived. Yes, since 2018 there has barely been a period where we have been below it again, at most a few day. Seems like in the current years it is by far the best indicator to locate a bottom, a short-term and long-term bottom both.

This cycles FTX collapse is the best example of that. We went below it just for a few days before being above it again as the price rallied a bit. And even the SVB collapse bottom could have been predicted through the Production Cost.

reddit image

26 thoughts on “The best indicator: No TA, just the Production Cost of one Bitcoin has been perfect to call every bottom.”

  1. Hang on, so if it’s not cost effective to mine that means that supply doesn’t increase in line with the demand causing the price rise? If that was the case, wouldn’t the price be more stable and self regulating?

  2. This is however dependent on where you are and what electricty it costs. So this could wildly wary

  3. Why is the cost of consistently going up? What are the factors contributing to the rise in cost?

  4. It’ll work wonderfully for years to come! unless I try and time the bottom with this metric

  5. This is like saying that people are most-poor at the bottom of economic recession, so, next time use that as a predictor for the bottom of the recession? How would you know poverty has maxed out at any given point of time??? Maybe when most people stop buying milk – could be a predictor?

    I am glad you did not call this TA else I would have lost my entire faith in humanity.

  6. For anyone who uses tradingview this is the script for this graph:

  7. The fact everyone is calling a bull market makes me thing dead cat…all indicators point to finding a bottom but market sentiment tells me it’s the local top.

  8. The best indicator is the hype levels. If your barber mentions it, maybe start buying more.

  9. Is there an easy way to look at this chart? Is it something I could produce with a python script?

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