- Bitcoin could reach $265,000 based on network fundamentals and the Hashrate/Market Cap Ratio.
- Current Bitcoin trends show bearish pressure, but long-term fundamentals suggest increases.
Bitcoin [BTC] sat at $61,512 at the time of writing, down by 1.4% in the past 24 hours. Despite this decline, Bitcoin remains a focal point for analysts and investors alike.
Recently, Ki Young Ju, CEO of analytics firm CryptoQuant, noted that Bitcoin’s network fundamentals could support a market valuation “three times its current size.”
This could potentially push the price to a staggering $265,000.
Amidst a backdrop of fluctuating prices, this analysis provides a deep dive into the underpinnings that could drive such a significant uptick.
Bitcoin: Unpacking the network fundamentals
Bitcoin operates on a proof-of-work (PoW) consensus mechanism, where miners use substantial computing power to secure the network and validate transactions.
These miners are compensated with block rewards, which are then often sold to cover operational costs, primarily electricity.
The health and profitability of mining operations are directly tied to Bitcoin’s market price, as these rewards are fixed in BTC value but fluctuate in USD terms.
One of the core metrics to consider is the Hashrate, which represents the total computing power miners are dedicating to the Bitcoin network.
Over the past year, the Hashrate has shown a consistent uptrend, suggesting increased confidence among miners, spurred by the price rally Bitcoin has experienced during this period.
Source: Blockchain.Com
To better understand how Bitcoin’s market cap relates to its Hashrate, Ki Young Ju referred to the “Hashrate/Market Cap Ratio.” This indicator compares the total valuation of Bitcoin against its Hashrate.
Interestingly, despite the current price levels being similar to those seen during the 2021 bull run, the Hashrate is now over three times what it was back then, indicating a stronger and more robust network
Source: Kim Young Ju/X
If the ratio’s peak from the last cycle is any indicator, the market cap could potentially increase more than threefold from its current levels.
Ju’s analysis suggested that with these fundamentals, a Bitcoin price of $265,000 could be within the realm of possibility, supported by a robust and growing network infrastructure.
Current investor behavior
Despite the optimistic long-term outlook based on network fundamentals, short-term market dynamics present a mixed picture.
Recent data from AMBCrypto highlighted a decline in Bitcoin accumulation across all investor cohorts.
This trend began in May and has seen all groups combined add roughly 10,000 Bitcoin to their holdings, which is notably less than the 19,000 new Bitcoins created over the same period.
Read Bitcoin’s [BTC] Price Prediction 2024-25
This suggests that smaller investors, often called shrimps, are currently leading the accumulation efforts, albeit at a reduced pace.
Technical analysis also indicates bearish pressure in the short term. Bitcoin’s price has been breaking structure to the downside, with current price actions suggesting a potential drop to the $56,000 range.
Source: TradingView