Speaking to CNBC, Michael Moro, CEO at Genesis Trading, said that he believes Bitcoin [BTC] will drop in value lower, past the mid $3000s and find its flat level at $3000.
There is currently support near the $4000 level, but Moro stated that, driven by selling pressure from people who got into Bitcoin quite recently, this support will not hold, observing that this support was tested twice in the past few days.
It is widely believed that Bitcoin, inherently, has a floor since it requires equipment and electricity for mining. Moro was asked what could be the new floor, since BTC price is already below the break-even cost for mining. To this, he said:“The cost of mining is going to go down, simply because the hashrate is dropping.The largest miners are willing to mine at a loss, up until the difficulty adjustment happens on the BTC network and the break even cost adjusts over time.”
The hashrate will decrease as miners stop mining. The network tries to produce one block roughly every 10 minutes. It is expected to produce 2016 blocks roughly every two weeks. If it takes less time to mine 2016 blocks, difficulty increases [increasing mining costs], and if it takes more time, difficulty decreases. Moro implied that as hashrate falls, difficulty will adjust, reducing mining cost.
In the past couple days, the $4000 level has been tested, he says. He stated that a lot of the selling that has happened in early, and mid 2018, is done by people who got into the Bitcoin during, or just before its bull run. Even some holders, from 2016, are starting to liquidate and take some gains. Trade volumes are at just 50% to 60% of what they were, when Bitcoin peaked last year, he said.
Moro was also asked whether the bottom is not $4000, nor $3000, but something much lower than that. He asserted that it is definitely very hard to profit as a day trader in this time. He further added:“The key thing for longer term buy-and-hold investors is that Bitcoin has done this before. This is about the fifth, or sixth, 75%+ drop in the ten-year history of Bitcoin. In that lens, institutional investors ultimately don’t care where the price of Bitcoin is at 2018 end, simply because they are looking at things three to five years out.”