Why A “Boring” Bitcoin Could Be A Good Thing

The current bitcoin trend can be described as “boring” by a lot of folks in the market. However, it is good to look at what this would mean in a space like the crypto industry that is used to fast-moving prices and quick-changing momentum. While the word “boring” may sound bad to investors who are used to these characteristics, Director of Global Macro at Fidelity, Jurrien Timmer, explains why this could inherently be a good thing for the digital asset.

Draw In Institutional Investors

The need for institutional investors in bitcoin cannot be overstated. For the digital asset to get to some of the forecasted values, institutional investors moving into the market has become a necessity. But will these institutional investors want to move into a highly unpredictable asset such as bitcoin?

Related Reading | Halfway To The Halving: What This Means For Bitcoin

In his recent Twitter thread, Timmer explained that a “boring” bitcoin is important if institutional adoption is to be expected. Pointing to the S2F model created by the infamous Plan B, he explains that bitcoin has closely followed this model. However, there is a deviation that is starting to take place.

The Director explained that instead of continuing to track the S2F model, BTC had instead started to follow the pink line which marked demand in the chart shared. This meant that as effective as Plan B’s model has been in the past, it seems bitcoin is cutting out a new trend for itself and that is now entirely driven by the demand. 

“So, in a more efficient two-way market, Bitcoin should deviate around that pink line, up and to the right,” Timmer explained.

BTC sticking close to pink demand line | Source: Twitter
Bitcoin Behaving Like A Traditional Asset

Now, one of the great gospels of bitcoin is how different the digital asset is from traditional risk assets. Nevertheless, as more time has passed and adoption is growing, it is beginning to behave more like a traditional risk asset. As more understanding comes, the investors who are purchasing the asset move from simply a price standpoint and move towards more efficient accumulation.

Timmer notes in his Twitter thread that institutional investors have likely come up with their own models which will help them know when a good time to buy bitcoin is. This could help them map out if they can get a 1.5x or 3x return from buying at a particular price.

BTC trading in the mid-$42,000s | Source: BTCUSD on TradingView.com

“For instance, If the demand model says that Bitcoin’s intrinsic value is $50k today and $100k two years from now (my thesis), then at $30k Bitcoin is going to look a lot better than at $70k,” he noted. Adding that “Price is what you pay but value is what you get.”

Related Reading | How Bitcoin Futures Premiums Exhibit Signs Of Market Exhaustion

Timmer closes out his thread explaining that getting the demand curve right would be very important “If indeed price starts to move more closely around an upwardly sloping demand curve.”

Featured image from MarketWatch, chart from TradingView.com

The current bitcoin trend can be described as “boring” by a lot of folks in the market. However, it is good to look at what this would mean in a space like the crypto industry that is used to fast-moving prices and quick-changing momentum. While the word “boring” may sound bad to investors who are used to these characteristics, Director of Global Macro at Fidelity, Jurrien Timmer, explains why this could inherently be a good thing for the digital asset.

Draw In Institutional Investors

The need for institutional investors in bitcoin cannot be overstated. For the digital asset to get to some of the forecasted values, institutional investors moving into the market has become a necessity. But will these institutional investors want to move into a highly unpredictable asset such as bitcoin?

Related Reading | Halfway To The Halving: What This Means For Bitcoin

In his recent Twitter thread, Timmer explained that a “boring” bitcoin is important if institutional adoption is to be expected. Pointing to the S2F model created by the infamous Plan B, he explains that bitcoin has closely followed this model. However, there is a deviation that is starting to take place.

The Director explained that instead of continuing to track the S2F model, BTC had instead started to follow the pink line which marked demand in the chart shared. This meant that as effective as Plan B’s model has been in the past, it seems bitcoin is cutting out a new trend for itself and that is now entirely driven by the demand. 

“So, in a more efficient two-way market, Bitcoin should deviate around that pink line, up and to the right,” Timmer explained.

BTC sticking close to pink demand line | Source: Twitter

Bitcoin Behaving Like A Traditional Asset

Now, one of the great gospels of bitcoin is how different the digital asset is from traditional risk assets. Nevertheless, as more time has passed and adoption is growing, it is beginning to behave more like a traditional risk asset. As more understanding comes, the investors who are purchasing the asset move from simply a price standpoint and move towards more efficient accumulation.

Timmer notes in his Twitter thread that institutional investors have likely come up with their own models which will help them know when a good time to buy bitcoin is. This could help them map out if they can get a 1.5x or 3x return from buying at a particular price.

BTC trading in the mid-$42,000s | Source: BTCUSD on TradingView.com

“For instance, If the demand model says that Bitcoin’s intrinsic value is $50k today and $100k two years from now (my thesis), then at $30k Bitcoin is going to look a lot better than at $70k,” he noted. Adding that “Price is what you pay but value is what you get.”

Related Reading | How Bitcoin Futures Premiums Exhibit Signs Of Market Exhaustion

Timmer closes out his thread explaining that getting the demand curve right would be very important “If indeed price starts to move more closely around an upwardly sloping demand curve.”

Featured image from MarketWatch, chart from TradingView.com

Tags: bitcoinbitcoin priceBitcoin S2FbtcbtcusdInstitutional Investors

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