- 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 indicate upside.
Bitcoin [BTC] was at $61,512 at the time of writing, down 1.4% in the past 24 hours. Despite this decline, Bitcoin remains a point of interest for analysts and investors alike.
Recently, Ki Young Ju, CEO of analytics firm CryptoQuant, said, 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.
Against the backdrop of fluctuating prices, this analysis offers a deep dive into the fundamentals that could drive such a significant increase.
Bitcoin: Unpacking the Network Foundations
Bitcoin operates on a proof-of-work (PoW) consensus mechanism, where miners use significant computing power to secure the network and validate transactions.
These miners are compensated with block rewards, which are then often sold to cover operating costs, mainly electricity.
The health and profitability of mining operations are directly linked to Bitcoin’s market price, as these rewards are captured in BTC value but fluctuate in USD terms.
One of the core metrics to take into account is the Hashrate, which represents the total computing power miners spend on the Bitcoin network.
Over the past year, the Hashrate has shown a consistent upward trend, indicating increased confidence among miners, fueled by the price increase that Bitcoin has experienced during this period.
Source: Blockchain.Com
To better understand how Bitcoin’s market cap compares to its Hashrate, Ki Young Ju referred to the “Hashrate/Market Cap Ratio.” This indicator compares the total valuation of Bitcoin with its Hashrate.
Interestingly, despite current price levels being similar to those during the 2021 bull run, the Hashrate is now more than three times what it was then, indicating a stronger and more robust network
Source: Kim Young Ju/X
If the spike in the ratio from the last cycle is any indication, the market cap could potentially increase more than threefold from 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 one decline in Bitcoin accumulation across all investor cohorts.
This trend started in May and has resulted in all groups combined adding approximately 10,000 Bitcoin to their holdings, which is significantly less than the 19,000 new Bitcoins created during the same period.
Read Bitcoin’s [BTC] Price forecast 2024-25
This suggests that smaller investors, often called shrimp, are currently leading the accumulation effort, albeit at a slower pace.
Technical analysis also points to short-term bearish pressure. Bitcoin’s price has broken the structure down, with current price action suggesting a potential drop to $56,000.
Source: TradingView