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Bitcoin price may be dropping deeper into a downtrend over the course of the last few months, but the first-ever cryptocurrency is actually much closer now to fair market value than it has been throughout the year.

However, as Bitcoin price falls toward fair valuations, the cost of production rises exponentially, and may be part of the cause of the downtrend itself.

Chartered financial analyst and staunch Bitcoin supporter Timothy Peterson has shared various metrics from crypto data aggregator CoinMetrics related to the leading cryptocurrency by market cap.

Related Reading | Former IMF Economist: Current Bitcoin Trend is Textbook Echo Bubble

According to the analyst, Bitcoin is currently trading at prices that would be considered fair for the cryptocurrency. Prices have fallen back toward levels of fairness, after spending much of 2019 soaring higher than the fair market valuation of what Bitcoin should be priced at.

Following the crypto asset bottoming out at fair prices around $3,100 at the start of the year, Bitcoins parabolic rally took the cryptocurrency beyond its fair price, but nowhere near as overvalued as it was during the crypto hype bubble in late 2017, or even its value during the 2018 bear market.

It wasnt until Bitcoin bottomed at $3,100 that the cryptocurrency reached fair value, and prior to that, it was 2016 before the crypto bull market really began. At the height of the bubble, Bitcoin reached valuations 1,000% higher than what it should have been.

But even though crypto prices are falling toward fair valuations, the cost of producing each BTC continues to rise.

According to a chart shared by digital asset analyst Charles Edwards, who has developed a tool that plots production costs onto Bitcoin price charts on TradingView, the price per BTC has begun to fall below the cost of production, causing miners to capitulate en masses, which could be in part responsible for the recent downtrend in crypto markets.

With Bitcoins halving in May set to reduce the block reward crypto miners receive in BTC by half, the cost of production could double overnight. How this may impact the market is anyones guess, but it could cause extreme selling by capitulating crypto miners, rather than pushing up the price of the scarce digital asset as many others are expecting to happen.

Related Reading | Bitcoin Must Clear Multiple Resistance Levels Before Its Out of The Woods

Bitcoin price is currently trading at roughly $7,150, a couple of hundred dollars less than the cost to produce each BTC. Interestingly, the fair market valuation metric also appears to coincide with of producing each Bitcoin.

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Bitcoin Price Reaches Fair Market Valuation, While Costs of Production Rise - newsBTC