- Based on network fundamentals and hash rate/market capitalization ratio, Bitcoin could reach $265,000.
- Although the current Bitcoin trend shows bearish pressure, long-term fundamentals suggest an upside.
Bitcoin [BTC] At the time of writing, it was trading at $61,512, down 1.4% in the past 24 hours. Despite this decline, Bitcoin remains a hot topic for both analysts and investors.
Ki Yong-joo, CEO of analytics firm CryptoQuant, recently said: I got it. Bitcoin's network fundamentals could support a market valuation of “three times its current size,” he said.
This could push the price up to a whopping $265,000.
Against the backdrop of price fluctuations, this analysis delves deep into the fundamentals that can cause such significant increases.
Bitcoin: Uncovering the basics of the network
Bitcoin operates based on a proof-of-work (PoW) consensus mechanism, where miners use considerable computing power to ensure the security of the network and verify transactions.
These miners are compensated with block rewards, which are then often sold to cover operating costs, primarily electricity.
These rewards are fixed in BTC value but fluctuate in USD terms, so the health and profitability of your mining operation is directly tied to the market price of Bitcoin.
One of the central metrics to consider is hashrate. This represents the total computing power that miners are putting into the Bitcoin network.
Over the past year, hashrate has shown a consistent upward trend, suggesting that the price increase Bitcoin has experienced over this period has increased confidence among miners.
Source: Blockchain.Com
To better understand how Bitcoin's market capitalization is related to its hash rate, Ki Yong-joo referred to the “hash rate/market capitalization ratio.” This indicator compares Bitcoin's total valuation and its hashrate.
Interestingly, even though current price levels are similar to the 2021 bull market, the hashrate is now more than three times what it was then, indicating a stronger and more robust network.
Source: Kim Young Joo/X
If the ratio's peak in the last cycle is any indication, market capitalization could more than triple from current levels.
Ju’s analysis suggested that given 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 trends present a mixed picture.
AMBCrypto’s recent data is: Decrease in Bitcoin accumulation Across all investor cohorts.
This trend started in May, when all groups combined added around 10,000 Bitcoins to their holdings, which is clearly less than the 19,000 new Bitcoins created during the same period.
read bitcoin [BTC] Price prediction for 2024-2025
This suggests that small investors, often referred to as shrimp, are now leading the accumulation effort, albeit at a slower pace.
Technical analysis also points to bearish pressure in the short term. Bitcoin price has broken its structure to the downside, and the current price movement suggests a possible fall to the $56,000 range.
Source: TradingView
