Bitcoin at $20,000 is cheap. But even a 2-fold drop in the exchange rate means a good risk-to-profi
Bitcoin stopped falling, and analysts were filled with optimism. According to one of them, the current price-to-quality ratio indicates the possibility of a successful purchase, which, according to another expert, has a good chance of making a profit.
On July 7, Jurrien Timmer, director of global assets at Fidelity Investments, published a series of tweets in which he analyzed the dynamics of the relationship between the bitcoin exchange rate and the number of its non-zero addresses, that is, wallets with a positive balance. Timmer came to the conclusion that the price of BTC/USD has now returned to the level of 2013.
At that time, bitcoin managed to reach the $1,130 mark after years of depression associated with the legendary collapse of the Mt.Gox cryptocurrency exchange.
"To estimate the value of bitcoin, I use the price of millions of non-zero addresses, and the diagram below shows that the value has returned to the levels of 2013 with accuracy, although the exchange rate against the dollar is only at the level of 2020," Timmer explained.
In other words, Bitcoin is cheap.
COMPARISON OF THE PRICE OF BITCOIN WITH THE SIZE OF ITS NETWORK. SOURCE: JURRIEN TIMMER
The analyst went further in his reasoning and suggested that the current cheapness of bitcoin may also indicate that Ethereum is now close to the bottom. This implies the expediency of investing in the two main cryptocurrencies.
Decrease by 0.5 times, growth by 12 times
Buying bitcoin at a price of $ 20 thousand has "strong" arguments even for those who allow the exchange rate to fall by another 50%.
James Lavish, a former hedge fund manager, drew attention to the simple mathematics associated with betting on bitcoin in the current conditions.
"With a BTC price of $20 thousand, if you think that the risk of decline is $10 thousand, and the growth potential is $250 thousand, then this means a 0.5-fold drop and a 12.5-fold increase. The risk-to-profit ratio is 25 to 1," he explained he tweeted to his followers.
For many, the price of $ 250 thousand for 1 BTC will now seem unrealistic, but it is not so great from the point of view of historical forecasts of cryptocurrency growth. For example, in 2019, billionaire Tim Draper suggested that the bitcoin exchange rate would rise to $250 thousand by 2023.
https://coin-signal.com/bitcoin/bitcoin-at-20000-is-cheap-but-even-a-2-fold-drop-in-the-exchange-rate-means-a-good-risk-to-profit-ratio/
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