The forecast was shared on YouTube videoJoe Burnett, Senior Marketing Manager for Unchained Capital argues that Bitcoin could reach a value of $750,000. Burnett says that this market cycle may have undervalued Bitcoin’s potential, and is often unaware of its larger context in the global finance ecosystem.
Bitcoin could soar to $750,000
Burnett starts by discussing a mistake that is often made in the analysis of markets, whereby analysts compare Bitcoin’s performance today with its past performances while ignoring how it has evolved over time. “I think it’s possible that many people are underestimating Bitcoin this cycle,” Burnett stressed the importance of viewing Bitcoins in terms of their relative positions within global wealth.
Burnett’s arguments are based on the Rational Root HODL Model, which he has discussed in depth over the podcast. “What Bitcoin Did.” This model predicts that Bitcoin will reach its third milestone in 2020. halving—an event that reduces the number of new bitcoins generated and thus awarded to miners for verifying transactions.
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Burnett elucidates, “This model is fascinating because it shows a logical inflection point that occurred in 2020 around the third halving. It highlights that illiquid supply as a percentage of total supply held at an all-time low percentage, and it’s been slowly climbing ever since.” This, he says, reflects an increasing trend of Bitcoins being owned by long-term owners rather than miner and speculators.
Burnett asserts that Bitcoin is now in a new phase, marked by a decreasing supply of liquid currency. “Until the third halving, Bitcoin was really just in the process of distributing coins via proof of work mining; almost 90% of all coins were mined by 2020,” He explains. After the halving, there was a subsequent decrease in coin production. This has led to a transition of a freely circulating supply into a tightly-held asset.
Burnett’s Forecast also uses a comparative analysis with goldGold has traditionally been viewed as an excellent store of value. This notion is challenged by the author, who highlights flaws within gold’s economy mechanics. “Gold has a negative feedback loop considering it’s not perfectly scarce like Bitcoin. Hundreds of billions of dollars of new gold are mined annually,” Burnett argues that gold is less appealing as an investment because of this.
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He describes Bitcoin’s halves as an a “positive feedback loop,” Where the reduction in supply every four-years inherently stimulates price appreciation and new waves of adoption. “The amount of new Bitcoin being mined gets cut in half. This repeats until no newly released Bitcoin are mined,” He suggests that there is a scarcity built in to the product, which increases its value as time goes on.
Burnett, zooming in on a global level, cites the nearly quadrillion dollars of total wealth that exists globally, and Bitcoin’s market capital is only a small fraction. He believes Bitcoin’s current market share will grow, and that it could eventually command a large portion of total global wealth.
Experts who are more conservative in their predictions, which see Bitcoin barely crossing $100,000 in the next few years, cannot even imagine this happening. “With all that being said, the ‘concept of diminishing returns’ could very easily be flawed. We live in a world with nearly 1 quadrillion dollars of total global wealth and Bitcoin is 0.1% of that,” Burnett states.
Michael Saylor is quoted by him as he concludes: “All your models will be broken,” Add to that “anything below the size of gold is absurdly early. Gold parity is now at about $750,000 per Bitcoin, meaning if the market size of Bitcoin just reached the market size of gold.”
BTC is currently trading for $
Featured image created with DALL·E, chart from TradingView.com
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Source: www.newsbtc.com
