Charles Edwards, the founder of Capriole Investments, sees a “new regime” for Bitcoin with improved network fundamentals and price action. He predicts explosive growth for Bitcoin, aided by next year’s block subsidy halving, making it the most complex asset in the world.
The Network Value to Transaction Value (NVT) metric, known as the Bitcoin “PE Ratio,” has hit a two-year high, implying value normalization and the beginning of a new market regime. NVT ratio calculates BTC’s market cap in relation to the 90-day average transaction volume flowing through on-chain BTC transactions.
Edwards recommends long-term investors start allocating funds to Bitcoin, given its improving network fundamentals and price action. Although the bottom for BTC price is uncertain, he believes the recent recovery in investment behavior has legs and foresees significant cyclical growth and returns by 2024.
There are several reasons why Edwards sees a new regime forming for BTC. First, Bitcoin has fully recovered from the price collapse of the third-biggest fraud in just two months. Additionally, the recent short squeeze had identical characteristics to the 2021 China mining ban BTC price bottom. The November/December period saw the worst sentiment and highest market hedging on record.
The $20,000 breakout in January was also significant, marking the most crucial price movement since the all-time high in 2021. Edwards presents a strong case for the $20,000 price level, citing factors such as historical highs, exposure of fraud, and production costs. However, some may disagree with his analysis and argue for different price levels based on other considerations.
NVT Metric Suggests Market is Undervaluing Bitcoin
Edwards urges investors to focus on the block subsidy halving, making Bitcoin the most complex asset worldwide. In Edwards’ view, the current undervaluation of Bitcoin based on NVT metric could lead to a new bull market. He also highlights Bitcoin’s secure transaction settlement as a key factor supporting its long-term value.
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According to Edwards, Bitcoin’s current price level is not expected to see a sharp increase. However, he anticipates a positive 2023, followed by significant growth and returns in 2024. He argues that Bitcoin is entering a new phase with the potential for explosive growth in the coming years. Edwards encourages long-term investors to start allocating funds to the cryptocurrency, which he believes is in the early stages of a new regime.
The author’s views are for reference only and shall not constitute any investment advice. Please ensure you fully understand and assess the products and associated risks before purchasing