NEWS OF CRYPTO MINERS CAPITAL EXPENDITURES BUDGETS DECLINE IS A POSITIVE FOR CRYPTO COIN PRICES

As with with any commodity, capital spending budgets   (CAPEX) is closely watched by investors and traders to help forecast the next move in a particular commodity.  When marginal revenues are higher than marginal cost, producers of commoditized products are likely to add to CAPEX spending in an effort to grow production.  The net effect is growth in aggregate supply.  The opposite is true when commodity prices fall below the marginal cost of production.  In this case, CAPEX spending is cut in the effort to conserve cash balances.

As producers reduce aggregate supply, the market subsequently rebalances, setting up for the next move higher.  So, with the price of Bitcoin trading near $6,400, which is below the mining marginal cost level of $8,600 accessing to Morgan Stanley, it is not a surprise that Nvidia lowered its forecast for crypto mining equipment sales.  In fact, it’s actually a rational market response. Bottom line, when investors get past the noise surrounding Nvidia’s lowered growth forecast, traders should realize that this is a constructive step needed for Bitcoin, especially,to eventually stage a rebound in price.