Bitcoin network fundamentals could sustain $265,000 price, CryptoQuant CEO explains.
The CEO of analytics firm CryptoQuant explained how Bitcoin network fundamentals could support a market capitalization three times its current size. Bitcoin hashrate/market cap ratio may reveal cycle upper bounds. In a new post on Related Read: Cardano Offers Better Buying Window Than Other Top Coins, Santiment Reveals BTC Is A Cryptocurrency That Runs On A Proof-of-Work (PoW) Consensus Mechanism. This means that validators, called miners, compete with each other using their computing power for a chance to win. Add the next block to the blockchain. Miners must pay a certain electricity cost to run this computing power. Typically, these chain validators do this by selling block rewards. These rewards are pegged to the BTC value and given at a more or less constant rate, so the main variable in a miner’s finances is the USD value of the asset. The economics of mining are closely tied to cryptocurrency prices. The central metric for miners is the hashrate, which measures the computing power this group has connected to the Bitcoin blockchain. Below is a chart showing the trend of the 7-day average value of this BTC indicator over the past year. The value of this metric appears to be declining recently | Source: Blockchain.com As the graph shows, Bitcoin hashrate has been on the rise during this period, largely due to the rally the asset price enjoyed during this window. To relate this fundamental metric to asset prices, the CryptoQuant CEO referred to the “hash rate/market cap ratio,” a metric that tracks what the market capitalization (i.e. total valuation) of a cryptocurrency is doing. Compare with hashrate. Below is a chart shared by Ju that shows the trend of this indicator over the past few years. The values of recent indicators seem to be at relatively low levels | Source: @ki_young_ju on This is despite the fact that asset prices are now at similar levels to what they were back then. The reason for this trend is that the hash rate of the network is now more than three times higher than it was back then. Related Read: PEPE Whale Moves $21 Million Worth of Coins – Here’s Their Destination A cycle peak may also be observed this time if the ratio is higher than the previous cycle peak, meaning that the market capitalization of the asset may triple or more. It is several times its current value. Based on this, Ju suggests that current network fundamentals could potentially sustain a price of $265,000. BTC Price As of this writing, Bitcoin is trading at around $62,300, up more than 9% over the past week. The coin price appears to have been on a downward trend over the past few days | Source: BTCUSD by TradingView Featured image by Kanchanara on Unsplash.com, CryptoQuant.com, Blockchain.com, charts by TradingView.com
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