The current bitcoin trend can be described as “boring” by a lot of folks in the market. This is a good thing to consider in a market like the cryptocurrency industry, where prices are volatile and momentum is constantly changing. While the word “boring” may sound bad to investors who are used to these characteristics, Director of Global Macro at Fidelity, Jurrien Timmer, explains why this could inherently be a good thing for the digital asset.
Institutional investors are attracted
Institutional investors in bitcoin are essential. In order for bitcoin to achieve some of its forecasted value, it is essential that institutional investors enter the market. Will these institutional investors be willing to invest in a volatile asset like bitcoin?
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His recent Twitter thread, Timmer explained that a “boring” bitcoin is important if institutional adoption is to be expected. He cites Plan B’s S2F Model and says that Bitcoin has been closely following this model. There is however a departure that is beginning to occur.
According to the Director, instead of following the S2F model S2F had been abandoned and BTC was instead moving to the pink line that indicated demand for the chart. This meant that as effective as Plan B’s model has been in the past, it seems bitcoin is cutting out a new trend for itself and that is now entirely driven by the demand.
“So, in a more efficient two-way market, Bitcoin should deviate around that pink line, up and to the right,” Timmer explained.
BTC staying close to pink demandline | Source: Twitter
Bitcoin acting like a Traditional Asset
One of the greatest gospels about bitcoin is its ability to be different from other risk assets. However, bitcoin is becoming more traditional and more popular as a risk asset. The asset is becoming more understood by investors. They no longer view it as a cost-per-unit investment but instead seek to maximize accumulation.
Timmer mentions in his twitter thread that institutional investors may have their own models, which can help them determine when it is a good moment to invest bitcoin. They could use this information to determine if they are able to get a return of 1.5x-3x by buying bitcoin at a certain price.
Source: BTCUSD on TradingView.com| Source: BTCUSD on TradingView.com
“For instance, If the demand model says that Bitcoin’s intrinsic value is $50k today and $100k two years from now (my thesis), then at $30k Bitcoin is going to look a lot better than at $70k,” he noted. Adding that “Price is what you pay but value is what you get.”
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Timmer ends his thread, explaining how important it would be to have the demand curve just right “If indeed price starts to move more closely around an upwardly sloping demand curve.”
Featured image taken from MarketWatch. Chart by TradingView.com