Why Bitcoin is Cheap at $23,000, Says Fidelity Expert
Bitcoin has been pushed down further during today’s trading session and is approaching critical levels of support. The first crypto by market capitalization gave back all the gains from last week’s rally and has been moving in the red for the past 24 hours.
At the time of writing, Bitcoin (BTC) is trading at $23,400 with sideways movement in the last day and a loss of 2% in the last 7 days.
Macro director for the investment company Fidelity Jurrien Timmer mean long-term Bitcoin investors have an opportunity to increase their holdings at current levels. Via his Twitter account, the expert claims Bitcoin is cheap when he explored the cryptocurrency’s price versus value chart.
Timmer’s bullish thesis is based on BTC’s adoption curve and the likely scenario where this curve will continue to trend to the upside and increase the underlying value of the cryptocurrency. As shown below, there is a direct relationship between BTC’s adoption and price.
The chart below shows the BTC price/network ratio, how Bitcoin reacts to more adoption, and the price. The former metric trended lower than BTC’s price until it was able to break above a critical resistance zone and turn into support.
Bitcoin has continued with this support for over a month, coinciding with BTC’s price reaching a yearly low of around $17,700. As the chart above shows, these levels have historically served well as resistance/support and suggested that BTC’s price is forming a bottom around that area.
Timmer had the following to say about BTC’s capacity to continue appreciating over the long term:
Bitcoin’s price-to-network ratio (my proxy for a valuation multiple) is back to 2014 levels. Meanwhile, the network continues to grow, roughly in line with a power regression curve. 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 (…).
Who is buying Bitcoin at its current levels?
If Timmer’s predictions are correct, the price of Bitcoin should trend higher and reach an all-time high of $100,000 by 2050 as more people adopt it and the circulating supply decreases. This could push BTC’s price close to $1 million by 2030.
Timmer also compared BTC’s price to gold and concluded that the cryptocurrency was experiencing its “biggest oversold condition in years”. This supports the expert’s theory that BTC’s price may have found a solid bottom on higher timeframes.
Additional data from Timmer records an increase in the number of BTC holders. 13% of the cryptocurrency’s total supply has entered the 10-year unused period with more and more people buying it in the long term.
Who is buying Bitcoin these days? Apparently not the tourists (ie short term holders). The percentage of Bitcoins held less than three months has barely budged lately. /5 pic.twitter.com/fKpvbEhE89
— Jurrien Timmer (@TimmerFidelity) 17 August 2022
