Jurrien Timmer, head of the Global Macro asset management Fidelity Investments, called $20,000 worth of Bitcoin “cheap” in a Twitter discussion.
Some people think that the current Bitcoin market prices offer a kind of value for the money not seen in years, despite concerns that cryptocurrency markets could experience more declines this year.
The analyst claims that Bitcoin (BTC) has not been this inexpensive since it cost $1,130 because BTC has a “compelling” risk/reward ratio.
Timmer came to the conclusion that the price of bitcoin has returned to where it was at the height of the 2013 bull market after examining the price of bitcoin in relation to the number of non-zero addresses—wallets with a positive balance.
Due to the failure of the exchange Mt. Gox, BTC/USD was able to reach roughly $1,130 at that time before consolidating for a number of years.
Timmer stated, “I use the price per millions of non-zero addresses as an estimate for Bitcoin’s valuation, and the chart below shows that valuation is all the way back to 2013 levels, even though the price is only back to 2020 levels. In other words, Bitcoin is cheap.”
It's the middle of summer, but for crypto, it's winter. Bitcoin and crypto in general have not been spared from the widespread drawdowns this year, and that’s an understatement. So, let’s see where things stand. 🧵 pic.twitter.com/k4nBE1nMk9
— Jurrien Timmer (@TimmerFidelity) July 8, 2022
When it comes to Bitcoin’s growth despite the present bad market, the price-to-network ratio is not the only positive indicator. Timmer noted that the acceptance of bitcoin still mirrors the development of the internet and that the growth cycles of the bitcoin network “appears to be intact.”
Furthermore, other cryptocurrencies than Bitcoin exhibit strong investment potential in terms of price-to-network ratio.
He wrote, “If Bitcoin is cheap, then perhaps Ethereum is cheaper. If ETH is where BTC was four years ago, then the analog below suggests that Ethereum could be close to a bottom.”
“25 to 1 Reward to Risk profile”
Even for those who think a price drop of 50% is still feasible, $20,000 BTC should still present a “compelling” investment argument.
James Lavish, a veteran fund manager and macroeconomics specialist, came to that conclusion after pointing out the straightforward math required to make a Bitcoin wager in the current market.
At $20K BTC, if you believe that the downside risk is $10K and the upside potential is $250K, then at these prices there is a .5X downside and 12.5X upside.
This is a 25 to 1 Reward to Risk profile. This is compelling.
— James Lavish (@jameslavish) July 8, 2022
“At $20K BTC, there is a.5X downside and 12.5X upside if you think the downside risk is $10K and the upward possibility is $250K. This has a 25 to 1 reward to risk ratio, he informed his Twitter audience.
A $250,000 asking price for BTC/USD is actually quite low by historical norms of price projection while being difficult to fathom this year.
Entrepreneur Tim Draper, who once claimed that Bitcoin will cost a quarter-million dollars by 2022, is one of its supporters.
At the time of writing, Bitcoin was trading at $21,500, a 10 % rise from its weekly low.
