Bitcoin (BTC), which was $1,130 in value, hasn’t been as good value. However, one analyst believes that BTC offers a compelling risk/reward ratio.
Jurrien Timmer (director of global macro, Fidelity Investments) described $20,000 Bitcoin in a July 7 Twitter thread as “cheap.”
Timmer: In other words, Bitcoin’s price is low
Although there are still concerns that crypto markets will continue to decline this year, some people believe that the current Bitcoin price levels offer a level of value that has not been seen in many years.
Timmer compared the BTC/USD price to the number of addresses that are not zero — wallets with positive balance — and concluded that BTC/USD has returned to the level it was at the peak in the 2013 bull market.
BTC/USD reached $1,130 at that time. After spending many years consolidating due to the collapse of Mt. exchange, BTC/USD was able to reach around $1,130 again. Gox.
Timmer explained that he uses the price per million of non-zero addresses to estimate Bitcoin’s value. The chart below shows that the valuation goes back to 2013, even though the price is back at 2020 levels.
In other words, Bitcoin can be cheap.
While the Bitcoin price/network ratio is a positive sign, it’s not the only indicator of Bitcoin’s growth in spite of the bear market. Timmer stated that Bitcoin adoption still reflects internet growth and that the Bitcoin network appears to be stable when it comes time to its growth cycles.
It is not only Bitcoin that shows signs of solid investment potential when it comes to the price/network ratio.
He wrote, “If Bitcoin is inexpensive, then maybe Ethereum is more affordable.”
“If ETH is four years ago where BTC was, then the analog below suggests Ethereum could be very close to a bottom.”
Bitcoin price/network ratio vs. BTC/USD chart. Source: Jurrien Teimmer/ Twitter
“0.5X downside, 12X upside”
For those who still believe that a 50% price drop is possible, $20,000 BTC could still be a compelling investment case.
Similar: This “biblical” Bitcoin pattern suggests that the BTC price could rise by 30% in October
James Lavish, an ex-hedge fund manager and macroeconomics expert, concluded that Bitcoin betting was simple in today’s economic environment.
“At $20K BTC you can believe that there is a $10K downside risk and a $250K upside potential. At these prices, there is a.5X downside but 12.5X upside. He explained that this is a 25-to-1 Reward to Risk profile to his Twitter followers.
“This is convincing.”
Although it is difficult to believe, the $250,000 price tag of Bitcoin/USD is actually quite modest by historical price prediction standards.
One of its supporters is billionaire Tim Draper. He initially believed that Bitcoin would be worth a quarter million dollars by 2022, but he later changed his mind.
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