Bitrabo Editorial
Bitcoin is currently showing upward movement, surpassing $60,000 with increasing momentum. However, there is a need for more effort from the bulls from a technical analysis perspective.
A significant step would involve surpassing the local resistance level at approximately $63,000. A definitive close above this level with high trading volume will confirm the buyers’ presence since August 8 and signal a potential resumption of Q1 2024.
Factors Contributing to a Potential $500,000 Bitcoin Value
If Bitcoin climbs above $66,000, $72,000, and reaches new all-time highs, it could trigger a surge in demand, leading to higher prices by the end of the year. Many traders anticipate a Bitcoin price increase, especially with the United Federal Reserve planning to lower interest rates, setting the stage for a supportive monetary policy.
Considering Bitcoin as a hedge against inflation, an analyst notes that when factoring in all influencing elements, the coin’s value should be considerably higher. Taking inflation and the evolving Bitcoin supply into account using a power law model, the analyst predicts a significantly increased value for Bitcoin by 2029.
Traditional power law models commonly used to forecast Bitcoin prices often overlook the impacts of inflation and fail to consider the increasing supply of BTC, as per the analyst’s findings.
When these model deficiencies are rectified and inflation and supply metrics are integrated, the re-evaluated power law model suggests that Bitcoin could potentially reach $500,000 by 2029, representing a 66% increase from previous estimates. The model emphasizes the critical role of using Bitcoin’s market cap as a value indicator.
Metcalfe’s Law and Institutional Demand Influence
This revised model aligns with Metcalfe’s Law and the network effect theory, which states that the value of a network, such as Bitcoin, is directly related to the square of its user base.
While the market cap may not be a flawless measure, it provides a more precise representation of Bitcoin’s intrinsic value compared to relying solely on the spot price, according to the analyst.
Besides inflation, traders anticipate increased valuation through inflows from spot ETFs, reminiscent of Q1 2024. Current data from Soso Value indicates that spot Bitcoin ETFs collectively hold over $55.96 billion worth of BTC, with BlackRock’s IBIT accumulating $21.5 billion in inflows since its launch in January 2024.