Why did Bitcoin fall below $5,000? Will it rebound? What should miners do?

When the tide goes out, you know who is swimming naked.

Bitcoin has fallen below $5,000, a drop of more than 40%. Data shows that Bitcoin has become one of the assets with the largest decline in this round, second only to oil. Tesla, which has recently resonated with Bitcoin, has also fallen by 40%.

Why did Bitcoin fall below $5,000? Yesterday, Wu said that the blockchain had made a detailed analysis: "Don't expect Bitcoin to halve as the epidemic spreads to the global crisis!"

The core reason is the global spread and intensification of COVID-19, which has led to people believing that cash is king, withdrawing cash from speculative products and not daring to speculate. As can be seen from the above figure, cash is the only asset that has not fallen so far, and investors naturally vote with their feet.

Will Bitcoin rebound later?

There are three reasons to support the rebound:

1. Data shows that bottom-fishing has begun, 76% of Coinbase users are buying, and the number of user addresses holding 1 BTC has reached a new high;

2. China announced that the COVID-19 epidemic has passed its peak, which shows that the epidemic is controllable. Judging from China's time, European and American countries will also pass their peak in two months, and the world economy will return to normal by then;

3. When the world economy returns to normal, the Bitcoin halving will bring a wave of positive sentiment.

For miners and mining machine manufacturers, if the current coin price and total computing power are maintained, then after the halving, only a few mining machines such as S19, S17, and M30S can make back their investment based on normal electricity costs. This is generally unfavorable for the mining industry, because the halving and the sharp drop in coin prices will significantly reduce the number of new miners deployed before the flood season.

Is there a chance? Yes.

At the beginning of 2019, when Bitcoin plummeted to $3,000, many mining farms shut down, and some basic second-hand mining machines such as Antminer S9 were almost treated as scrap metal and sold at bargain prices. At that time, some people in the cryptocurrency circle bought tens of thousands of mining machines at extremely low prices. A few months later, the price of the currency quickly rebounded, and they resold the mining machines and immediately made dozens of times the profit.

There has never been a shortage of speculators in the cryptocurrency world, and greed is still the right rule when others are panicking.