Bitcoin Nadir May Be In, Research Firm Says

A research firm noted in a report last Friday that the 2023 bottom for bitcoin may already be in. If that forecast turns out to be accurate, it will be welcome news for crypto bulls everywhere.

In theory, it’s not alarmingly bullish simply because the biggest digital currency is falling sharply this year. Blockware Solutions noted the bottom for bitcoin may be in and highlighted the benefits of mining the cryptocurrency next year.

That point may speak to rebound potential with exchange-traded funds such as VanEck Digital Transformation ETF (DAPP) and VanEck Digital Assets Mining ETF (DAM).

“As the Bitcoin industry continues to recover from the price crash from $69,000 to $15,400, Blockware Intelligence predicts a complementary increase in demand for new hardware,” the research firm noted. “Mining rig prices have fallen significantly since their peak in 2021, and buying new generation hardware now at a discount allows market participants to capitalize on the next Bitcoin bull run by seeing both rig cash flows increase and the value of their rig increase over the coming years.”

As the name suggests, DAM, which tracks the MVIS Global Digital Assets Mining Index, will benefit from a mining in bitcoin. ETFs’ components have been under siege this year, liquidating the digital asset’s reserves to raise cash amid falling prices.

Due to the energy-intensive nature of bitcoin, energy prices are highly relevant to miners. So is energy stability, which indicates that the industry can be somewhat sensitive to geopolitical events. This is one of the reasons why DAM member companies are increasing their use of renewable energy.

“Miners with fixed PPAs and hosting contracts will benefit from locking in low energy prices in an inflationary environment. These miners have effectively hedged the cost side of their operations, while their revenues are likely to grow over time,” Blockware Intelligence added.

To be sure, there are other potential catalysts for both DAM and DAPP heading into 2023. Some of these may be revealed in on-chain data, which highlights some encouraging, arguably overlooked points in bitcoin’s favor.

“As more people are educated about the value proposition of Bitcoin, an immutable small monetary asset with zero counterparty risk, the rate of adoption is increasing. This is evident from the growing number of on-chain devices. While the growth rate is always positive, it tends to accelerate during Bitcoin bull markets. Right now we are seeing the start of that acceleration indicated by the 30D moving average of new units crossing above the 365D moving average,” Blockware Intelligence concluded.

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The opinions and forecasts expressed herein are solely those of Tom Lydon and may not materialize. Information on this website should not be used or construed as an offer to sell, a solicitation of an offer to buy or a recommendation for any product.