CryptoQuant CEO explains how Bitcoin’s network could be able to support three times its current market capitalization.
This ratio could indicate a limit for Bitcoin’s cycle.
The new post Ki Young Ju, the CEO of CryptoQuant and its founder, spoke on X about how network fundamentals can reveal more about Bitcoin’s market cap.
BTC runs on Bitcoin. proof-of-work The consensus algorithm (PoW), which is a mechanism where validators, called miners, compete against each other by using their computing power in order to be able to add the next Block to the Blockchain
The miners must pay for electricity to operate this computer power. These validators sell their chain to validate it. block rewards. The BTC rewards are given at an almost constant rate and the USD price of the assets is what determines the miner’s finances.
The mining economy is closely related to cryptocurrency prices. One of the most important metrics for miners is profitability. HashrateThis measure is the amount of computing power that this cohort connects to the Bitcoin blockchain.
The chart below shows the average 7-day value of the BTC indicator for the last year.
Source:| Source: Blockchain.com
The graph below shows that Bitcoin Hashrate is on an upward trend during this time period. This has a lot to do with the price rally of the asset.
The CEO of CryptoQuant has used the metric to relate the fundamental metric and the price. “Hashrate/Market Cap Ratio,” This is a tool that tracks how well the market cap The Hashrate is the comparison between the (i.e., total value) and the cryptocurrency.
The chart below, which was shared by Ju and shows this trend over the past couple of years.
Recent data suggests that the value of this indicator has dropped to a low level | Source: @ki_young_ju on X
The graph reveals that Bitcoin Hashrate/Market Cap Ratio was at low values compared with the highs it reached during the 2021 bull market.
The asset is still at the same price as it was back in the day, despite its current level. This is because the Hashrate of the network is more than triple what it used to be.
If this cycle’s peak is also observed at the same ratio as the top of the previous cycle, the value of the asset could be three times higher than its present price.
Ju suggests, based on the above data that current fundamentals of network can potentially support a price as high as $265,000.
BTC Price
Bitcoin was trading around $62,300 at the time this article was written, an increase of more than 9% in the last week.
Source:| Source: BTCUSD on TradingView
Featured Image by Kanchanara from Unsplash.com. Charts from TradingView.com.
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