Bitcoin Price Breaches Production Cost Threshold, Easing Miner Selling Pressure
Bitcoin has surged to over $80,000 in recent days, but according to JPMorgan, its price remains above an estimated production cost of around $85,000. This has analysts saying that selling pressure from miners may ease.
JPMorgan's team led by Nikolaos Panigirtzoglou calculated the average production cost for Bitcoin at approximately $85,000 in their latest assessment. They noted that when Bitcoin trades above this level, it alleviates financial pressure on miners and reduces the risk of miner selling.
Bitcoin has been trading below its estimated production cost for 280 days before this week's sharp rise. JPMorgan analysts consider the production cost as a 'soft floor' for Bitcoin's price. When the price remains below this level, it negatively impacts miner profitability, especially those with high electricity and equipment costs.
According to JPMorgan, if Bitcoin consistently stays above $85,000, miners may no longer need to sell their Bitcoins to cover operational expenses, mitigating forced selling in the market. Historically, the production cost has acted as a 'soft floor' for Bitcoin's price.