The current bitcoin trend can be described as “boring” by many people in the market. However, it’s good to look at what that would mean in a space like the crypto industry, which is used to fast-moving prices and rapidly changing momentum. While the word “boring” might sound bad to investors used to these traits, Fidelity’s director of global macro, Jurrien Timmer, explains why this could be an inherently good thing for the digital asset.
Attract institutional investors
The need for institutional investors in Bitcoin cannot be overestimated. In order for the digital asset to reach some of the projected values, it has become necessary for institutional investors to enter the market. But will these institutional investors want to get into a highly unpredictable asset like Bitcoin?
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In his recent Twitter thread, Timmer explained that if institutional acceptance is to be expected, a “boring” bitcoin is important. He points to the S2F model created by the infamous Plan B and explains that Bitcoin has followed this model closely. However, there is a deviation that is starting to take place.
The director explained that instead of continuing to follow the S2F model, BTC has instead started to follow the pink line marking demand on the split chart. As effective as the Plan B model has been in the past, it appears Bitcoin is carving out a new trend that is now driven entirely by demand.
“So in a more efficient two-way market, bitcoin should deviate up and to the right around that pink line,” Timmer explained.
BTC stays close to the pink demand line | Source: Twitter
Bitcoin behaves like a traditional asset
Well, one of the big messages from Bitcoin is how different digital assets are from traditional risk assets. However, as more time has passed and acceptance increases, it is starting to behave more like a traditional risk value. As understanding improves, investors buying the asset move away from a simple price standpoint and move toward more efficient accumulation.
Timmer notes in his Twitter thread that institutional investors have likely developed their own models to help them know when is a good time to buy Bitcoin. This could help them figure out if they can get a 1.5x or 3x return on buying at a given price.
BTC trading in mid-$42,000 | Source: BTCUSD on TradingView.com
“For example, if the demand model says the intrinsic value of bitcoin is $50,000 today and $100,000 two years from now (my thesis), then bitcoin will look a lot better at $30,000 than at $70,000,” he noted. “Price is what you pay, but value is what you get.”
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Timmer concludes his thread by explaining that getting the demand curve right “when price actually starts to move more tightly around an up-sloping demand curve” would be very important.
Featured image from MarketWatch, chart from TradingView.com
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