A few hours ago, Bitcoin experienced a drop below the $26,000 mark, reaching a low point of approximately $25,987. Nonetheless, within the cryptocurrency community, there is a prevailing belief that Bitcoin’s intrinsic or “fair value” far exceeds its current market price. Mark Yusko, who is the founder and CEO of Morgan Creek Capital Management, asserts that the true fair value of the largest cryptocurrency currently stands at $100,000, despite its market trading in the range of $25,000 to $26,000.
Yusko supports his valuation by drawing on historical patterns. He highlights that in previous instances, Bitcoin’s value surged from $100 to $1,000, and subsequently from $1,000 to $10,000, in response to halving cycles. In fact, he characterizes these substantial increases as “parabolic blow-off tops.”
Bitcoin’s Track Record: 86% Profitability for HODLers
In early September, Dylan LeClair, from UTXO Management, highlighted an interesting observation regarding Bitcoin. He pointed out that a significant portion of BTC’s circulating supply had remained untouched during the course of one month. Specifically, within this timeframe, only 5.4% of the circulating BTC supply had been actively transacted, marking an all-time low. Conversely, a substantial 94.6% of the supply remained dormant, reflecting a pattern where BTC was being held for the long term by its owners. This observation aligns with the notion that a majority of Bitcoin’s supply is either held by long-term investors or has been inactive for extended periods.
Moreover, LeClair anticipated that regulatory approval for spot Bitcoin Exchange-Traded Funds (ETFs) would likely materialize either by the end of 2023 or the beginning of 2024. This regulatory development is expected to trigger a notable influx of capital into the cryptocurrency market. According to Mark Yusko, an executive at Morgan Creek, this influx could potentially reach approximately $300 billion. This influx, combined with the high percentage of dormant BTC supply and the limited amount available for trading, is expected to have a substantial impact on Bitcoin’s price. Yusko emphasized that with “a $300 million inflow on top of a $100 million free float, the price is poised to increase significantly.”
It’s worth noting that, over the 4,787 days since Bitcoin’s inception, BTC holders have found themselves in a profitable position for roughly 4,107 days. Data from Look into BTC reveals that, relative to the current price, investors have experienced profitability on approximately 85.8% of those days.