Bitcoin’s recent surge in early 2023 has led Charles Edwards, founder of Capriole Investments, to declare the beginning of a “new regime,” according to an interview from February 24th.
As the network fundamentals and price action improve, Edwards believes the cryptocurrency is gearing up for an explosive growth period. Next year’s block subsidy halving is a significant event that will make Bitcoin “the hardest asset in the world with certainty.”
The Network Value to Transaction Value (NVT) metric, often referred to as the Bitcoin version of a “PE Ratio,” is also at a two-year high, indicating value normalization and the start of a new market regime.
NVT is the ratio of BTC’s market capitalization to the 90-day average transaction volume that flows through on-chain BTC transactions.
Charles Edwards On Bitcoin’s Bull Cycle
Edwards believes that the recent recovery in investment behavior around Bitcoin, in line with network fundamentals and price action, suggests that long-term investors should start allocating funds to the cryptocurrency.
While the jury is still out on whether the bottom is in for BTC price, Edwards sees the recent rebound as having legs and predicts that the more significant cyclical growth and returns will come in 2024.
There are several reasons why Edwards sees a new regime forming for BTC, including the fact that Bitcoin has completely eclipsed the price collapse of the third-biggest fraud of all time 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, as it marked the most important price movement since the all-time high in 2021.
$20,000 is an important price level for several reasons, including that it is a 2017 all-time high, the price level at which the FTX fraud was exposed, and the intersection of Bitcoin’s Electrical Cost and production cost.
Edwards advises investors to pay attention to the upcoming block subsidy halving, as it will make Bitcoin the hardest asset in the world with certainty.
He also suggests that the recent NVT metric is a signal that the market is undervaluing Bitcoin versus the value of transactions it is securely settling, which could lead to a new bull market.
While Edwards does not expect Bitcoin’s price to rally dramatically upward from its current level, he predicts a positive 2023 and significant cyclical growth and returns in 2024. Overall, he argues that Bitcoin is entering a new phase with the potential for explosive growth in the coming years.
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