Bitcoin (BTC) is not as cheap as it cost $ 1,130, analysts claim, because BTC offers a “strong” risk-reward ratio.
I discussion On Twitter July 7, Jurrien Timmer, director of Macroeconomics at Fidelity Investments’ Asset Manager, simply called $ 20,000 “cheap” bitcoin.
Timmer: “In other words, Bitcoin is cheap”
While there are still fears that cryptocurrency markets could pull further this year, some believe that current bitcoin price levels offer value for money not seen in recent years.
Analyzing the price of BTC against the number of non-zero addresses – a wallet with a positive balance – Timmer concluded that the BTC / USD pair has now returned to where it was at the peak bull market of 2013 now.
At the time, BTC / USD managed to reach about $ 1,130 before spending several years consolidating thanks in part to the demise of the Mt. Gox.
“I am using the price per million non-zero addresses as an estimate of bitcoin valuation, and the chart below shows that the valuation is fully back to 2013 levels, although the price has not returned to 2020 levels, “Timmer explained.
“In other words, bitcoin is cheap.”
Bitcoin’s price-to-network ratio is not the only encouraging sign of bitcoin growth despite the current bear market. Timmer added that the adoption of bitcoin still reflects the rise of the internet, and the bitcoin network appears to be “secure” in terms of its growth cycles.
When it comes to the price / network ratio, bitcoin is not the only one showing signs of strong investment potential.
“If Bitcoin is cheap, maybe Ethereum is there too,” he wrote.
“If ETH is where BTC was four years ago, the analogue below suggests that Ethereum could be close to the bottom.”
Graph of bitcoin price / network ratio versus BTC / USD ratio. Source: Jurrien Timmer / Twitter
“0.5X down, 12X up”
Meanwhile, 20,000 BTC should be a “strong” investment, even for those who think a 50% price drop is still possible.
Read also: This ‘bible’ bitcoin model suggests that the price of BTC could rise 30% by October
That’s the conclusion of James Lavish, a former hedge fund manager turned macroeconomic expert, who drew attention to the simple mathematics of betting on bitcoin in today’s environment.
“At $ 20,000 BTC, if you think the downside risk is $ 10,000 and the upside potential is $ 250,000, then at those prices there is a 0.5X and upside down 12.5X disadvantage. This is a reward for the risk profile of 25 to 1, ”he said. declared for Twitter followers.
“It simply came to our notice then. »
While this year’s hard to imagine, the $ 250,000 price for the BTC / USD pair is actually quite modest by historical projected price standards.
His fans include billionaire Tim Draper, who initially argued that bitcoin would cost a quarter of a million dollars by 2022.
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