Recently, it has been practically shown what increased demand can do to the price. Requests for Bitcoin ETFs have brought in more people interested in Bitcoin. They quickly chased him away price by thousands of dollars. Ripple vs SEC court case won has restored confidence in their XRP token. Very quickly he increased the price by more than 80% and so we can continue. Of course, all of this can be made into a model. And he says that in 2025 the token could trade up to 130,000 USD.
A big advantage for the creation of such models is the transparency of the blockchain and the limited number of bitcoin tokens. This distinguishes us from, for example, a mutual fund. There, if necessary, more units are just issued for the net asset value (NAV) and the fund increases its capitalization. But what if the fund had a limited number of these units. This would mean that if one party wants to buy, they have to find another party that wants to sell. The price therefore fluctuates according to the current distribution of supply and demand. In case of high demand, the price may significantly exceed the calculated NAV.
The price of Bitcoin is driven up by increasing demand
Now let’s look at Bitcoin. By estimating the average amount of tokens in each wallet in circulation, I can also estimate the market cap. And then divide this by the number of tokens in circulation to get the price. Thanks to the transparency of the blockchain, we know the number of non-zero wallets quite precisely. The graph shows us the average amount (in USD) on the wallets. It often fluctuates due to changes in supply and demand, not due to sales. Many wallets just hold and show no movement.
We apply the growth curve of wallets in circulation to this figure and arrive at the range where the price of bitcoin should move in the following years. By the fall of 2025, the price could reach $130,000 and possibly even higher.
Conclusion
Although the model is very simple, there is often strength in simplicity. The whole thing actually says that as more and more investors start coming into the crypto, the price of bitcoin must rise. Because everyone will want to have at least the average of what others have in their wallet. And convincing others to sell is primarily possible at a higher price.
2023-07-15 08:00:00
#demand #drives #price #Bitcoin
