As the bulls fight to keep the $40,000 mark, Bitcoin may be in a downtrend. At $44,500, the first cryptocurrency by market capital was rejected. The bears threatened to push it back down to $30,000.
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At press time, first crypto market cap traded at $40,160. There was a loss of 5.1% and 8.8% in the 7-days, respectively.
As Bitcoin continues to show signs of strength, it is quickly shifting from fearful sentiments in crypto market.
However, Jurrien Timmer, Director of Macro for Fidelity, believes BTC’s price has remained rangebound since 2021 with a low at $30,000 and a high around $65,000. He believes the current price action is “mostly noise” and proposed a change in perspective.
Timmer can be seen as an example in the image below. presentedThis is the Bitcoin demand curve, which was driven by an increase in Bitcoin addresses that have a balance over 0. This chart is going “up and to the right”, the expert said and suggests BTC will continue to see an increase in demand which could increase its market cap from its current $755 billion to $15 trillion by the end of the decade.
Turrien arrived at this conclusion by comparing Bitcoin to big tech company Apple and its network growth by applying Metcalfe’s Law. According to this principle, the network’s value is equal to twice its users.
By using this Law, Timmer deducted Apple’s estimated price and valuation from 1996 until today. In that period, Apple’s market cap and valuation were expected to grow by 53x, but the company presents a 1699x increase surpassing expectations by a long margin. Timmer explained:
If Apple’s increase in market value should have been roughly the square of its growth in sales (53 to the power of 2), then we get an expected growth rate of 2855x for Apple’s market value. At 1699x, it’s in the ballpark.
Bitcoin could reach a $700K price in the next decade
Conversely, Apple’s price has increased by around 1457x, Timmer said, since 1996 with a 30x increase in its price-to-sales ratio. The expert predicted its value by extrapolating this thesis to Bitcoin. Timmer stated:
Bitcoin’s valuation has increased 867x since 2011, while its price has increased 640,633x. If we apply Metcalfe’s Law and calculate the square of 867, we get 751,111. This figure is about the same as the realized price gain of 640633.
Although Bitcoin and Apple are very different assets, the expert believes they are on a “similar path” when considering their network growth. As seen below, both Apple’s share and BTC’s price saw a massive appreciation in their very early stage.
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Timmer concluded with two scenarios for the Bitcoin demand curve, they differ on their slopes”, the expert said, but aim at a similar long term growth with BTC’s price rising above $1 million after the year 2035.