In the past 45 days since it began in July 2022, Bitcoin and the broader cryptocurrency market have seen a strong upswing. Currently, Bitcoin is currently 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 thesis.
Timmer explains that Bitcoin’s price-to-network ratio is currently back to where it was in 2014. On the other hand, according to the price regression curve, its network has continued to grow.
Politeness: Loyalty
The director of Fidelity further explains: “For me, the main nuance is the slope of the acceptance curve. Whether we use the mobile phone curve or the internet curve as a proxy, Bitcoin’s price is below its actual and projected network growth curve. This curve provides a basic anchor for the price of bitcoin.”
Comparison of Bitcoin and Gold
The Fidelity boss explains that looking at the bitcoin/gold ratio will be important when comparing bitcoin to gold. He further adds that the recent sell-off has resulted in the most oversold conditions in recent years. “Technically, the recent sell-off created the largest oversold state 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 significantly. On a 10-year chart, the percentage of Bitcoin HODLers has hovered above 13%.
Bitcoin vs Ethereum
Timmer draws a direct comparison between the Bitcoin and Ethereum networks, noting that the latter has grown much faster. He also notes that ETH hasn’t been rewarded enough for a higher price-to-network ratio.
However, Timmer explains that the reason ETH isn’t rewarded enough is because the Ethereum blockchain is less decentralized compared to Bitcoin’s. He further adds:
“Maybe some of that will change when ETH merges. The price analog of Ethereum vs. Bitcoin four years ago continues to suggest that the crypto winter is over.”
Bhushan is a FinTech enthusiast and has a keen sense of understanding the financial markets. His interest in economics and finance draws his attention to the emerging blockchain technology and cryptocurrency markets. He is constantly in a learning process and motivates himself by passing on the knowledge he has acquired. In his free time, he reads thriller fiction novels and sometimes explores his cooking skills.
The content presented may contain the personal opinion of the author and is subject to market conditions. Do your market research before investing in cryptocurrencies. The author or publication assumes no responsibility for your personal financial loss.
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