Bitcoin Nadir May Be In, Says Research Firm | ETF Trends

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

In theory, it’s not an alarmingly bullish call simply because the largest digital currency is slumping mightily this year. Blockware Solutions noted the bottom for bitcoin could be in and highlighted the advantages of mining the cryptocurrency next year.

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

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

As its name implies, DAM, which tracks the MVIS Global Digital Assets Mining Index, would benefit from a recovery in bitcoin. The ETF’s components have been under siege this year, liquidating reserves of the digital asset to raise cash amid tumbling prices.

Due to the energy-intensive nature of bitcoin, energy prices are highly relevant to miners. So is energy stability, indicating that the industry can be somewhat sensitive to geopolitical events. Those are among the reasons that DAM member firms are boosting use of renewable energy.

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

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

“As more people are educated on the value proposition of Bitcoin, an immutably scarce monetary good with zero counterparty risk, it’s adoption rate increases. This is evident by the growing number of on-chain entities. 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 entities crossing above the 365D moving average,” concluded Blockware Intelligence.

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