The Significance of bitcoin Reaching $70,000: An Energy-based Valuation
bitcoin, the pioneering cryptocurrency, has reached a new milestone as its price surged towards $70,000. This significant achievement was marked by Charles Edwards, the founder of Capriole Investments, who identified this price point as a crucial juncture in bitcoin’s value trajectory. According to Edwards’ analysis, based on on-chain data, bitcoin has attained its intrinsic value at around $70,000, as measured by the energy input into the network.
Energy and Fair Valuation
Capriole’s bitcoin Energy Price metric, developed by Edwards, indicates that the current price of bitcoin reflects its fair value based solely on the energy consumed by miners. This simplistic approach aligns with bitcoin’s fundamental principles and signifies the first time since late 2020 that bitcoin has reached such fair pricing, according to this metric.
Moreover, Edwards highlighted the resurgence of profitability among bitcoin miners despite the impending block subsidy halving. Miners are currently enjoying solid profit margins, which have historically correlated with significant repricing and potential further upside for bitcoin’s price.
Market Sentiment and Future Outlook
While some investors anticipate a prolonged correction following bitcoin’s all-time highs, others argue that institutional demand will continue to support the market. Venturefounder, a contributor to CryptoQuant, emphasizes the significance of March for bitcoin and ethereum (eth), the largest altcoin.
Failure to achieve new all-time highs in March, according to Venturefounder, could lead to downside pressure in April and May. This potential development could coincide with the halving event and the expected decision on Ether exchange-traded funds (ETFs) in the United States, which could significantly influence the trajectory of bitcoin and ethereum prices in the coming months.
If btc?src=hash&ref_src=twsrc%5Etfw” rel=”nofollow noopener” target=”_blank”>#btc and $eth fail to make a definitive new ATH breakout in March, I think it’s more likely we see more downside in April/May leading to the halving and eth ETF approval.
Then maybe Cup and handle.
March is probably the most important month of this cycle following such…
— venturefoundΞr (@venturefounder) March 8, 2024
In summary, bitcoin reaching $70,000 signifies a crucial juncture where the cryptocurrency’s energy consumption aligns with its fair value. The resurgence of miner profitability and institutional demand contribute to a potential further upside for bitcoin’s price, while March holds significant importance in the current market cycle. Failure to achieve new all-time highs could lead to downside pressure in the upcoming months, coinciding with key events such as the halving and Ether ETF approval.
