It's the middle of summer, but for crypto, it's winter. Bitcoin and crypto in general have not been spared from the widespread drawdowns this year, and that’s an understatement. So, let’s see where things stand. 🧵
At its recent low of $17,600, Bitcoin is now below even my more conservative S-curve model, which is based on the internet adoption curve. (See chart above.) /2
Looking at Bitcoin’s network growth, it’s clear that the adoption curve is tracking the more asymptotic internet adoption curve, rather than the more exponential mobile phone curve. Per Metcalfe’s Law, slower network growth suggests a more modest price appreciation. /3
However, based on a simple power regression line, Bitcoin’s network appears to be intact. /4
That continued growth in Bitcoin’s network, combined with lower prices, means that Bitcoin’s valuation is coming down. /5
I use the price per millions of non-zero addresses as an estimate for Bitcoin’s valuation, and the chart below shows that valuation is all the way back to 2013 levels, even though price is only back to 2020 levels. In other words, Bitcoin is cheap. /6
If Bitcoin is cheap, then perhaps Ethereum is cheaper. If ETH is where BTC was four years ago, then the analog below suggests that Ethereum could be close to a bottom. /END
h/t to @RaoulGMI for the ETH analog
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