BTC Price Analysis: Evaluating Bitcoin’s Profit Potential After the Halving
Jurrien Timmer, the Director of Global Macro at Fidelity Investments, offers a detailed examination of the future trajectory of Bitcoin, specifically in comparison to gold.
Timmer begins his analysis by estimating the percentage of gold held for monetary purposes, excluding jewelry and industrial usage. Drawing data from the World Gold Council, he suggests that approximately 40% of the total above-ground gold is used for monetary purposes.
Timmer proposes that Bitcoin has the potential to capture around a quarter of the monetary gold market, which is valued at approximately $6 trillion. With Bitcoin’s current market capitalization at $1 trillion, this presents an interesting opportunity for growth.
Historically, Bitcoin halvings have had a significant impact on its price. However, Timmer introduces a hypothesis suggesting that future halvings may result in diminishing returns. By comparing the outstanding supply and incremental supply of Bitcoin to gold, Timmer illustrates how the diminishing impact of halvings could become more pronounced in the future.
To address this potential issue, Timmer has developed a modified Stock-to-Flow (S2F) curve that takes into account the changing dynamics of Bitcoin’s supply. By overlaying an asymptotic supply curve onto the original S2F curve, Timmer creates a modified curve that aligns more closely with the supply characteristics of gold. This allows him to generate hypothetical price projections for Bitcoin.
Based on these projections, Timmer suggests that Bitcoin could reach a price of approximately $100,000 by the end of 2024. However, he notes that while Bitcoin’s scarcity advantage will continue, its impact on price may gradually diminish over time.
Timmer concludes his analysis by emphasizing the potential significance of Bitcoin capturing a quarter of the monetary gold market. This would represent a substantial shift in the global distribution of wealth and could lead to a gradual increase in Bitcoin’s price, reshaping the dynamics of the cryptocurrency market.
In summary, Jurrien Timmer’s analysis provides a thought-provoking perspective on the future of Bitcoin, taking into account factors such as halvings, market share relative to gold, and modified S2F curves. His insights contribute to the ongoing discussions surrounding Bitcoin’s role in the global financial ecosystem.