A New Analytics Method Points Towards Mainstream Adoption of Crypto
A former Bloomberg analyst, Jamie Coutts, believes that fundamental blockchain analysis indicates that cryptocurrency is on its way to mainstream adoption. Coutts explains that this analysis is based on Metcalfe’s Law, which states that the value of a communications network is proportional to the square of the number of connected users in its system.
According to Coutts, the data shows that Bitcoin’s user base continued to grow in 2022 and 2023, despite fluctuations in BTC’s price. This suggests a positive trajectory towards mainstream adoption.
Coutts further emphasizes that blockchain fundamental analysis is a new field that combines network theory principles with Metcalfe’s Law. He points out that Daily Active Users (DAUs) for smart contract blockchains have reached all-time highs, currently standing at 6.34 million on average over a 30-day period. However, the aggregate market cap for these networks is still 40% below its peak in 2021.
BTC Could Reach $100,000 by 2025 Based on On-Chain Indicator
Earlier this week, Coutts also discussed another indicator suggesting that Bitcoin (BTC) could potentially reach a minimum price target of $100,000 by 2025. He has been monitoring Bitcoin’s MVRV (market value to realized value) Z-score, which compares its market value to its realized value to determine whether it is undervalued or overvalued.
Comparing BTC’s price performance to previous cycles, Coutts notes that Bitcoin is currently ahead of the previous two cycles. In the last cycle, the MVRV Z-score peaked above six. If the current cycle continues to moderate, he believes that a range of 4-5 standard deviations is fair, indicating a minimum BTC price of $100,000 by 2025.
At the time of writing, Bitcoin is trading at $61,660, reflecting an 8.5% increase in the last 24 hours.
Hot Take: Crypto on the Path to Mainstream Adoption
Jamie Coutts’ analysis suggests that cryptocurrency is moving towards mainstream adoption based on fundamental blockchain analysis and Metcalfe’s Law. The growth of Bitcoin’s user base in 2022 and 2023, despite price dips, indicates a positive trajectory for widespread acceptance.
The increasing number of Daily Active Users (DAUs) for smart contract blockchains further supports this notion. However, while DAUs reach new all-time highs, the aggregate market cap for these networks still has room to grow.
Coutts also provides insight into potential future price movements for Bitcoin. By analyzing the MVRV Z-score, he predicts a minimum BTC price target of $100,000 by 2025. Comparing BTC’s current cycle to previous ones, Coutts believes that if the current cycle continues to moderate, a range of 4-5 standard deviations is reasonable.
This analysis showcases the potential for cryptocurrency to become more widely adopted and integrated into mainstream society.
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