The Director of Global Macro at Fidelity Investments, Jurrien Timmer, continues to provide insightful frameworks for understanding the valuation and growth of Bitcoin. In a recently updatedTimmer shared his opinion on the adoption and value of Bitcoin, illustrated with detailed charts that show both historical trends and hypothetical scenarios.
Timmer's models aim to simplify the complex growth dynamics of Bitcoin, bridging the gap between network adoption and valuation. “While the supply is known, the demand is not,” he said, underscoring the critical role of adoption curves and macroeconomic variables such as real rates and monetary policy.
Adoption curves: slower but steady growth
Despite a slowdown in the growth of the Bitcoin network, as measured by the number of wallets with non-zero balances, Timmer noted that the trend is still in line with the steep power curve shown in the adoption chart updated it. Although the Internet adoption curve has a gentler slope, Bitcoin's adoption path remains steeper, indicating that it is growing rapidly but maturing.
Importantly, Timmer pointed out a key limitation in measuring the growth of wallets: the unverified wallet/address number due to Bitcoin ETFs, which consolidate holdings in a few wallets. “It's very likely that the wallet/address number is under-verified,” he said, pointing out that ETFs are masking a wider distribution of Bitcoin adoption.
Monetary policy meets adoption dynamics
Building on his previous models, Timmer added a new layer to his valuation framework by incorporating money supply growth alongside real interest rates. The updated charts compare two hypothetical paths for Bitcoin valuation: one driven by adoption curves and real rates, and another that includes currency inflation as a factor.
“Again, these are not predictions,” Timmer explained, “but just attempts to see the use case based on adoption, real rates, and monetary inflation. ” This layered approach emphasizes how external macroeconomic forces, such as monetary policy, can affect Bitcoin adoption and valuation.
Why is this important?
Timmer's updated models confirm Bitcoin's position as a maturing financial asset. By combining historical S-curves, Metcalfe's Law, and macroeconomic factors, it offers an overview of Bitcoin's unique combination of network resources and monetary characteristics. His work highlights the importance of adoption in driving Bitcoin's value, while also showing how the world's monetary situation could shape its future .
For Bitcoin proponents and skeptics alike, Timmer's insight is a valuable framework for understanding the asset's dual nature as a network and as a form of money. The inclusion of monetary inflation in his models further reinforces Bitcoin's potential as a hedge against fiat currency depreciation.
The road ahead
As Bitcoin continues to grow, Timmer's models provide an essential lens to monitor its development. Whether it's the flattening of the adoption curve or the interplay between monetary policy and valuation, his analysis underscores the complexity of asset growth – and its enduring relevance in the world of finance .
For investors, analysts, and enthusiasts, these insights are a reminder of Bitcoin's transformative potential, even as its growth curve matures.
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