The current Bitcoin trend can be described as “boring” by a lot of people in the market. However, it is good to look at what this could mean in a space like the cryptocurrency industry that is used to fast-moving prices and rapidly changing momentum. While the word “boring” may sound bad for investors accustomed to these characteristics, Jurrien Timmer, director of Global Macro at Fidelity, explains why this could be an inherently good thing for a digital asset.
Draw Institutional Investors
The need for institutional investors in Bitcoin cannot be overstated. For a digital asset to reach some of the expected values, institutional investors’ transition to the market has become a necessity. But will these institutional investors want to move into a highly unexpected asset like Bitcoin?
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Speaking Twitter themeTimmer explained that “boring” bitcoin is important if institutional adoption is to be expected. Referring to the infamous Plan B S2F model, he explained that Bitcoin followed that model closely. However, there is an aberration starting to occur.
The manager explained that instead of continuing to follow the S2F pattern, BTC instead started following the demand pink line in the joint chart. This means that despite the effectiveness of the Plan B model in the past, Bitcoin appears to be carving out a new direction for itself and this is now entirely driven by demand.
“So, in a more efficient two-way market, bitcoin should veer around that pink line, up and to the right,” Timmer explained.
BTC sticking close to pink demand line | Source: Twitter
Bitcoin behaves like a traditional asset
Now, one of Bitcoin’s greatest gossip is how different digital assets are from traditional risky assets. However, as more time passed and adoption increased, it was starting to act like a traditional risk asset. With increased understanding, investors who buy the asset are moving away from just a price point of view and towards more efficient accumulation.
Timmer notes in his Twitter thread that institutional investors have likely come up with their own models that will help them figure out when is the right time to buy bitcoin. This may help them determine if they can get a 1.5x or 3x return from buying at a given price.
BTC trading in the mid-$42,000s | Source: BTCUSD on TradingView.com
“For example, if the order form says that the intrinsic value of Bitcoin is $50,000 today and $100,000 two years from now (my thesis), then at $30,000 Bitcoin will look a lot better than $70,000.” Adding, “The price is what you pay but the value is what you get.”
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Timmer closes its thread indicating that getting the demand curve right will be very important “If the price has already started to move very closely around an upward sloping demand curve.”
Featured image from MarketWatch, chart from TradingView.com