Bitcoin “cheap” at $ 20K as BTC price to wallet ratio mimics 2013
Bitcoin (BTC) has not had such a good value since it cost $ 1,130, an analyst claims as BTC offers a “convincing” risk / reward ratio.
In a Twitter thread On July 7, Jurrien Timmer, director of global macro at asset manager Fidelity Investments, simply described $ 20,000 Bitcoin as “cheap.”
Timmer: “In other words, Bitcoin is cheap”
While fears that the crypto markets may suffer further decline this year remain, some believe that current Bitcoin price levels provide the kind of value for money that has not been seen for many years.
By analyzing the BTC price versus the number of non-zero addresses – wallets with a positive balance – Timmer concluded that BTC / USD is now back where it was at the top of the bull market in 2013.
At that point, BTC / USD managed to reach around $ 1,130 before spending several years consolidating thanks to the demise of the Mt. Gox.
“I use the price per million of non-zero addresses as an estimate of Bitcoin’s valuation, and the chart below shows that the valuation is all the way back to 2013 levels, even if the price is only back to 2020 levels,” Timmer explained.
“In other words, Bitcoin is cheap.”
The Bitcoin price / network ratio is not the only encouraging sign when it comes to Bitcoin’s growth despite the current bear market. Timmer added that Bitcoin adoption still reflects the growth of the Internet, and that the Bitcoin network “appears to be intact” when it comes to growth cycles.
Furthermore, when it comes to price / network ratios, it is not just Bitcoin that shows signs of solid investment potential.
“If Bitcoin is cheap, then maybe Ethereum is cheaper,” he wrote.
“If ETH is where BTC was four years ago, then the analogue below suggests that Ethereum may be near the bottom.”
“0.5X bottom, 12X top”
$ 20,000 BTC should meanwhile still provide a “convincing” investment case even for those who believe that a price drop of 50% is still possible.
Related: This ‘biblical’ Bitcoin pattern suggests that the BTC price may rise by 30% by October
It was the conclusion of James Lavish, a former hedge fund manager who became a macroeconomic expert, that drew attention to the simple math involved in a Bitcoin bet in today’s environment.
“At $ 20K BTC, if you think the downside risk is $ 10K and the upside potential is $ 250K, then at these prices there is a 0.5X downside and 12.5X upside. This is a 25 to 1 reward to risk profile,” he told Twitter followers.
“This is compelling.”
Although difficult to imagine this year, a price tag of $ 250,000 for BTC / USD is actually quite modest compared to historical standards for price prediction.
Among its supporters is billionaire Tim Draper, who nevertheless initially insisted that Bitcoin would cost a quarter of a million dollars by 2022.
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