Bitcoin, the world’s largest cryptocurrency, experienced a significant drop to approximately $38,600 after the approval of Bitcoin Spot ETFs. Fidelity Managing Director Jurrien Timmer recently analyzed this development and provided valuable insights.
Over the past week, the introduction of eleven spot Bitcoin products resulted in the release of “BTC proxy” positions in Bitcoin futures and Bitcoin-sensitive stocks. Timmer anticipates ongoing fluctuations in the Bitcoin price, signaling a potential long-term impact.
Timmer’s assessment emphasizes the influence of Bitcoin’s network size and growth on its price dynamics, in addition to the impact of rarity characteristics (stock-to-flow) and real rates (FED policy). His analysis of Bitcoin’s network growth, depicted in a standard strength regression curve, indicates the continuation of the S-curve structure.
The Managing Director asserts that Bitcoin’s price has reverted to its fair value band, aligning with the curve’s slope derived from the internet adoption curve of previous decades. He notes that the curve’s width is determined by the real rate band of -2% (top) and +2.5% (bottom), showcasing a comprehensive analysis of Bitcoin’s price dynamics.
Accompanying Timmer’s analysis is a chart presenting the fair value of Bitcoin’s price based on the internet adaptation curve, providing visual insight into the relationship between network growth and price dynamics.
As with any financial analysis, it is important to note that this information is not intended as investment advice and should be carefully considered within the context of individual financial strategies.
