Market Watch: Bitcoin’s Upward Potential Curbed by These Key Factors
Fidelity Investments' Jurrien Timmer, who oversees global macro matters, has shared insights indicating that Bitcoin's potential upward trajectory might encounter some limitations.
Timmer’s observations, communicated to his substantial following of over 167,000, emphasize two key factors that could affect Bitcoin‘s trajectory.
According to Timmer, the pace of Bitcoin’s adoption and the prevailing high-interest rates are significant variables that could temper the cryptocurrency’s surge beyond the $45,000 mark throughout 2023 and a substantial portion of 2024.
What’s next for Bitcoin? If real rates remain at +2%, and the adoption curve continues to grow in line with internet adoption a few decades ago, then the upside seems somewhat limited for now. pic.twitter.com/byPTcz43Rk
— Jurrien Timmer (@TimmerFidelity) August 18, 2023
Timmer’s prognosis integrates an analysis of Bitcoin’s adoption rate, drawing parallels with the historical growth of internet adoption. He also factors in the constraining effect of a genuine interest rate exceeding 2%, accounting for inflation-adjusted nominal interest.
In Timmer’s assessment, the current scenario suggests a somewhat restricted upside potential for Bitcoin, given a consistent real interest rate of +2% and an adoption curve resembling the gradual ascent of internet adoption in prior decades.
If Bitcoin’s adoption curve continues to grow along the slope of a typical power curve, it could take more than a year to revert to the old highs. pic.twitter.com/iK2TILLURz
— Jurrien Timmer (@TimmerFidelity) August 18, 2023
Timmer’s visual representation implies that Bitcoin might see a modest uptick to approximately $45,616 by the close of the following year. However, a plausible reduction in interest rates could usher in a more optimistic scenario, projecting a potential peak of $96,210 before the conclusion of 2024.
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Considering these dual factors, Timmer’s analysis proposes that Bitcoin could be currently trading above its justified value, possibly leading to a market correction that could drive the cryptocurrency down to $20,933.
Bitcoin has been in a holding pattern near $30k, and continues to trade somewhat ahead of itself, at least based on real rates (the still-negative term premium for bonds is relevant) and network growth. pic.twitter.com/t8hvni5TR3
— Jurrien Timmer (@TimmerFidelity) August 18, 2023
Notably, Timmer observes that Bitcoin has exhibited a steady pattern in the vicinity of $30,000, but its valuation seems somewhat premature, particularly when taking into account genuine rates (with the still-negative term premium for bonds holding relevance) and the progression of its network.
Timmer’s assessment extends to a model that envisions Bitcoin’s price movement adhering to a customary power curve. This model implies that Bitcoin could regain its all-time peak of $68,992 by December 2024, albeit with the possibility that a return to previous highs might take more than a year, should the adoption curve align with the slope of such a curve.
At the time of writing, Bitcoin is trading at $26,013, marking a 7% decrease within the last 24 hours.
Alexander Stefanov
Reporter at CoinsPress
Alex is an experienced finance journalist and a cryptocurrency and blockchain enthusiast. With over five years of experience covering the industry, he deeply understands the complex and constantly evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His passionate approach allows him to break down complex ideas into accessible and insightful content. Follow up on his content to be up to date with the most important trends and topics - stay ahead of the curve with CoinsPress.
