Jurrien Timmer, Director of World Macro at Constancy Investments, gives a nuanced evaluation of Bitcoin’s future trajectory, notably compared to gold.
Bitcoin vs. Gold
Timmer begins the evaluation by estimating the share of gold held for financial functions, excluding jewellery and industrial utilization. Drawing knowledge from the World Gold Council, he means that financial gold constitutes roughly 40% of the entire above-ground gold.
Timmer proposes that the potential market share of Bitcoin can seize round 1 / 4 of the financial gold market, with the latter valued at roughly $6 trillion and Bitcoin’s market capitalization at $1 trillion.
Bitcoin Halvings and Diminishing Returns
Traditionally, Bitcoin halvings have performed a pivotal position in influencing its value. Nevertheless, Timmer introduces a speculation suggesting diminishing returns from future halvings. By evaluating the excellent provide and incremental provide of Bitcoin to gold, Timmer illustrates how the diminishing affect of halvings might change into extra pronounced sooner or later.
To handle the potential diminishing affect of halvings, Timmer has represented the market dynamics with a modified Inventory-to-Circulate (S2F) curve. This curve, derived by overlaying an asymptotic supply curve onto the unique S2F curve, goals to seize the altering dynamics of Bitcoin’s provide. Timmer makes use of a regression system, incorporating the preliminary S2F curve and the asymptotic provide curve, leading to a modified S2F curve that aligns extra carefully with the provision traits of gold.
Utilizing the modified S2F mannequin and contemplating the provision traits of gold, Timmer generates hypothetical value projections for Bitcoin.
These projections, signalling a possible value of roughly $100,000 by the tip of 2024, current a state of affairs through which Bitcoin’s shortage benefit continues, however its affect on value steadily diminishes over time.
Timmer concludes by emphasizing that if Bitcoin have been to seize 1 / 4 of the financial gold market, it could signify a considerable shift within the world distribution of wealth. This shift might steadily propel Bitcoin’s value upward over the approaching years, reshaping the dynamics of the cryptocurrency market.
Summarising his evaluation …
Jurrien Timmer’s evaluation offers a thought-provoking perspective on Bitcoin’s future, incorporating concerns of halvings, market share relative to gold, and modified S2F curves. Timmer’s insights contribute to the continuing discussions round Bitcoin’s position within the world monetary ecosystem.