Bitcoin’s bearish structure in recent weeks has raised clear concerns about the future of the flagship asset. Amid these concerns, speculation exists about its trajectory, with some pointing to a low as low as $25,000. However, an on-chain analyst recently took to social media platform X to explain why Bitcoin’s drop to $25,000 is an unlikely scenario in the current cycle.
The electric cost model points to a potential Bitcoin bottom
In a June 6 post on X, crypto analyst Ted Pillows said implicit that the Bitcoin price could fall further before reaching a final bear market bottom. This conjecture is based on the Bitcoin Electrical Cost model.
For context, the model estimates Bitcoin’s fundamental production costs by measuring the electricity required to mine new BTC. Because mining operations typically consume significant amounts of energy, the metric is often used as a measure of Bitcoin’s inherent value. This is because it represents the minimum price at which miners can operate sustainably in the long term.
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In line with historical data, Pillows explained that Bitcoin bear markets have never fallen below these electricity costs, despite the severe declines seen during these periods. On the contrary, bear markets have often found bottoms near this crucial price level.
Pillows pointed out that Bitcoin’s current electricity cost is around $48,694 – a threshold that is still somewhat far from Bitcoin’s current market price. According to the analyst, this suggests that the BTC price could find support near $50,000 if the current downturn continues.
However, Pillows highlighted a caveat in this analysis, stating that it would take an extraordinary global event for this support zone to be breached. In the event that the world is hit by a recession or a pandemic as severe as COVID, the Bitcoin price could temporarily fall below estimated production costs due to panic-induced selling.
Silent BTC Accumulation on Binance Underway as Outflows Steadily Rise
In a Quicktake post on CryptoQuant, analyst CryptoOnchain says marked an interesting contradiction going on within the Bitcoin market. According to the on-chain analyst, BTC accumulation events are underway on Binance.
The analyst noted that technical indicators – particularly the RSI (14) and the EMA50/200 – tell a clearly bearish story. For example, RSI values have fallen to extreme levels near 6.4, and the EMA50/200 is currently showing a “Death Cross” pattern.
At the same time, Binance’s Exchange Netflows reads negative (-0.58σ), indicating that Bitcoin is consistently leaving Binance – an event that further suggests that holders are accumulating BTC rather than simply panic selling. But then CryptoOnchain explained that the undeniable threat of a long-term push still looms given the high Open Interest.
At the time of writing, the price of BTC stands at around $602,388, reflecting an increase of almost 3% in the past 24 hours.
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Featured image from iStock, chart from TradingView