China’s crackdown on Bitcoin miners is pushing the price lower by spreading fear in the market. However, analysts believe this could actually be a good thing for Bitcoin in the medium term.
That’s because historically, anytime the price of Bitcoin drops below the mining costs, a bull run usually follows. However, the bad news is that when that mining price floor drops too much, it presents the risk of a significant price dip, and in this case, the price floor is dropping.
One crypto expert that has taken note of this is Capriole CEO Charles Edwards. Edwards tweeted that as Chinese miners exit the stage, this scenario was already playing out.
His argument was that as the hash rate got redistributed to other locations, bitcoin production cost was dropping too. However, this also meant that the price floor that the spot price could cross was getting lower. This, he said, while it creates buying opportunities, could see Bitcoin dip much further.
For this reason, Edwards believes that all the FUD that the China mining crackdown has created is not good. He believes that it could easily see Bitcoin test historic lows that could trigger a huge sell-off.
For context, the 2017 rally was followed by massive retracement. With the mining price floor so low, what followed was a correction that saw Bitcoin hit lows of $3000, from highs of over $20k.
Such a scenario is making long-term Bitcoin bulls uncomfortable. That’s because besides pulling down the price floor, the FUD has no basis in reality. Data shows that while there is a perception that China monopolizes Bitcoin mining, it is distributed worldwide. North America is one of the regions that have benefited immensely from the increased hostility towards Bitcoin mining by China.
