Cane Island Advisors’ Global Macro Manager, Timothy Peterson has also penned down the valuation model for Bitcoin, the pioneer cryptocurrency, based on Metcalfe’s Law. Peterson made a series of tweets recently in which he predicted that by the end of November, Bitcoin would reach the $12,000 mark and in a decade, the price of BTC would reach $1 million. The twitter threat had first been published on October 11th, 2020 when Peterson stated that there is a 90% probability that Bitcoin would never go below the $11,000 value mark again. There is no doubt that he is quite serious about it, but the fact remains that this prediction has been made before quite a lot of time.
So much so that, it has rather become a meme because every time, the prediction is proven wrong. However, what is different this time is that Peterson is not just saying this because of the hype. According to the analyst, he claims that the prediction model he developed back in 2017 has proven to be mostly accurate since then. He also stated that his model was able to successfully predict the end-of-the-year prices of various cryptocurrencies in the last two years.
The best example in this regard would be that of 2018, when Peterson had predicted a price of $3,500. When the year came to an end i.e. on December 31st, 2020, the price of BTC had been around $3,782. This is actually a difference of 7%. Apart from this, a mid-range estimate had also been predicted by Peter for the end of 2019 and he believed that the value of Bitcoin would be around $7,000. On the last day of 2019, the recorded price of Bitcoin was approximately $7,243. The same methods were used by the analyst for making the bold claim that by the start of 2024, Bitcoin would be worth $100,000.
He has predicted a price of $1 million per Bitcoin by March of 2028. Always cheeky, the man has actually issued a very specific prediction of value for the end of November. He is convinced that there is a 90% chance that Bitcoin would have a value of $12,000 or above. It appears that the analyst had a very simple idea, which is just a bit complex to execute. First, you need to assess the demand for Bitcoin and this can be done by taking a look at the number of wallets that are currently holding the cryptocurrency.
Next, you take a look at the supply of Bitcoin, which, at this point is somewhere around $18.5 million. A price model has been developed by Peterson, using this information and he has leveraged the Metcalfe Law for this purpose. According to the law, the value of a communications network is in proportion to the square of the number of users within it. In the case of Bitcoin, it means those who are actually holding BTC on the blockchain itself. Peterson defended his model by claiming that the law is factual, just like gravity.