The astonishing real value of a Bitcoin
September 9, 2021 11:52 AM
As a purely digital and dematerialized currency, the value of a bitcoin (BTC) can sometimes seem abstract to understand, especially at first glance. Between the quasi-religious vision of the Savior Bitcoin and the open hostility of nations, banks and rating agencies towards the king of cryptos, what is perhaps the most reasoned and reasonable value of Bitcoin today?
Quantifying the "supply shock" on Bitcoin
In this difficult exercise in evaluating the value of a bitcoin, analyst Willy Woo offers us a model based on the very telling ratio between supply and demand.
Via a first publication entitled "Supply shock, price prediction by quantifying the intention to buy and sell", Willy Woo reminded us a month ago that this "supply shock" occurs at a time when the sale and production of new bitcoin is overwhelmed by the scale of demand and purchases of BTC.
In an updated model published by the analyst on Twitter on September 5, we discover an algorithm which now estimates that the current fair price of a BTC would be around $ 55,000 (knowing that at the time of write these lines, a bitcoin was priced at around $ 51,500).
“In this view of demand and supply, an investor who has no intention of selling is on the demand side, while an investor who is willing to sell is on the side of the offer (…) "
The algorithm that estimates the price of Bitcoin based on the "supply shock" - Source: Twitter account @woonomic
A model of the value of Bitcoin considered prudent and realistic
According to Willy Woo's term, this estimate of a fair value of Bitcoin at $ 55,000, however, would be "conservative" and not particularly optimistic.
Indeed, one of the metrics that make up this algorithm, the supply shock on crypto-exchanges, is in an all-time-high situation (highest historical) as the analyst explains:
"[This model is conservative] because one measure of the supply shock - the supply shock on crypto exchanges - is now above all previous records."
Thus, there is never so little supply of bitcoins stored on centralized exchanges, compared to the supply on private wallets. However, these individual wallets are rather intended for the long-term custody (the famous "HODL") of the precious cryptocurrency, where the BTC of the crypto-exchanges - conversely - are more likely to be liquid, because exchangeable. quickly.
By estimating the supply that is not available in relation to the supply that is available, Willy Woo thus observes a trend that is increasingly approaching a generalized supply shock, which could cause a strong discrepancy. on the rise in Bitcoin prices. But beware, even if some forecasts are even crazier - like Fidelity's with a BTC at $ 100 million by 2035 - we will have to keep a cool head. Because as relevant as they may be, mathematical models cannot predict the future and its contingencies.