Fidelity CEO explains why Bitcoin (BTC) is cheap at current levels

Over the past 45 days since the beginning of July 2022, Bitcoin and the broader cryptocurrency market have made a strong rally. As of now, Bitcoin is facing resistance at $24,000. Jurrien Timmer, Director of Global Macro at Fidelity believes that Bitcoin is currently “cheap” according to the BTC adoption curve paper.

Timmer explains that Bitcoin’s price-to-network ratio is currently back at 2014 levels. On the other hand, the network has continued to grow in accordance with the price regression curve.

The Fidelity director further explains: “For me, the main nuance is the slope of the adoption curve. Whether we use the cell phone curve or the Internet curve as proxies, Bitcoin’s price is below the actual and projected network growth curve. That curve provides a fundamental anchor for Bitcoin’s price”.

Bitcoin and gold comparison

The Fidelity manager explains that if Bitcoin were to be compared to gold, it would be important to see the Bitcoin/Gold ratio. He further adds that the latest sale has produced the most oversold conditions in recent years. “Technically, the recent selloff produced the largest oversold condition in years (measured as the number of standard deviations from the trend),” he said.

An interesting fact that Timmer points out is that the percentage of Bitcoin HODLers is growing considerably. On a 10-year chart, the percentage of Bitcoin HODLers has hovered above 13%.

Bitcoin vs Ethereum

Drawing a direct comparison between the Bitcoin and Ethereum networks, Timmer points out that the latter has grown much faster. He also notes that ETH has not been rewarded enough for having a higher price-to-network ratio.

However, Timmer explains that the reason why ETH does not receive enough rewards is that the Ethereum blockchain is less decentralized compared to Bitcoins. He further adds:

“Perhaps some of that will change as ETH enters its consolidation. The price analog of Ethereum vs Bitcoin four years earlier continues to suggest that the crypto winter has come to an end.”

Bhushan is a FinTech enthusiast and has a keen flair for understanding the financial markets. His interest in economics and finance draws his attention to the emerging markets of blockchain technology and cryptocurrency. He is continuously in a learning process and stays motivated by sharing his acquired knowledge. In his spare time, he reads thriller novels and sometimes explores his culinary skills.

The content presented may include the author’s personal opinion and is subject to market conditions. Do market research before investing in cryptocurrencies. The author or publication has no responsibility for your personal financial loss.