According to crypto expert RJ Fulton, long-term investors should ignore Bitcoin (BTC)’s recent price fluctuations. The expert states that as the coin continues to grow, the price will be subject to the dynamics of limited supply and increasing demand. Meanwhile, the rate of new addresses joining the network is close to a two-year high. The expert takes a deep dive into Bitcoin.
Bitcoin rewards long-term investor
cryptocoin.comAfter the dismal performance of Bitcoin (BTC) in 2022, the recent jump in price makes it seem like the worst is over. While Bitcoin’s recent gains certainly feel good after a brutal 2022 that caused its price to drop by more than 70%, these are short-term moves in the price increase. It can be hard not to get caught up in price fluctuations, but investors who can maintain a long-term perspective and avoid snap decisions are better suited to success with Bitcoin.
If you think you might be having a hard time keeping the big picture in focus, there is a chart that often helps me avoid the hysteria of people who pay too much attention to Bitcoin’s price movements. Below is a chart of Bitcoin price in the form of annual candlesticks on a logarithmic scale. This is useful here because it’s better at displaying data that covers a wide range of oscillating values.
This makes it perfect for viewing Bitcoin’s historical price, which has gone from just a few cents per token to over $60,000. In this perspective, daily fluctuations are almost completely eliminated. By zooming out, one pattern becomes all too clear: Bitcoin rewards the long-term investor. There are bearish years where the candles are red, but these are only minor setbacks in Bitcoin’s rise. For some optimism, note that Bitcoin has never posted two negative years in a row.
Really limited supply
If past trends continue, Bitcoin is more likely to climb. This boils down to a simple but powerful dynamic: supply and demand. One of the key features of Bitcoin is its limited supply. His code ensures that there are only 21 million Bitcoins in circulation. There are about 19.25 million currently in circulation, and the remaining 1.75 million will be available at a decreasing rate until the year 2140, when the last Bitcoin is mined.
Since the rate at which new tokens enter circulation decreases every four years, Bitcoin is considered a deflationary asset. Unlike the US dollar and almost all other fiat currencies, Bitcoin investors benefit from an increase in purchasing power over time. Its limited supply and the characteristics of a deflationary asset are two of the main reasons why the world’s first cryptocurrency has gone from a few pence worth (at one point) to an all-time high of almost $69,000. Even better, the demand for Bitcoin only seems to be increasing.
Key indicators return to bull market zone
Since a Blockchain is basically a place for users to transact, it makes sense to measure activity by evaluating the number of new users and the number of transactions. From this perspective, the simple concept of ‘more is better’ applies in general. When you look at both, one thing becomes clear: Bitcoin’s price today is at unprecedented levels as it was within the confines of the previous bull market.
Rather than looking at the total number of addresses on the Bitcoin Blockchain, it is more advantageous to measure the joining rate of new addresses. According to the latest data, the number of new addresses joining the network looks as high as it was in the spring of 2021, when Bitcoin hit as high as $63,500. The current rate at which new assets are added to the network, with around 122,000 new addresses per day, is higher than 90% of the days in which Bitcoin existed. With the increase in the number of users on the network, the number of transactions also increased rapidly. Similar to address growth, the number of transactions is unseen as Bitcoin is near all-time highs. The number of daily transactions today is just under 310,000 and averaged over 8.5 million per month starting in 2023. The last time they were this high was in March 2021.
There is another rather vague measure that deserves to be uncovered: miner income from wages. While this metric is overlooked, the profitability from fees (rather than the normal mining reward) typically reflects the state of the market as a whole. When profitability from fees is negative, Bitcoin has often found itself in the middle of a bear market. But when profitability shifts, bull markets often come, and for the first time since summer 2021, miners are in the green.
What do the numbers show for Bitcoin?
There’s plenty of data to support this view, including some that suggests the latest crypto winter may be unraveling. To begin with, the number of positive-balance wallets recently exceeded an all-time high of 45 million. Both the number of transactions and the rate of new addresses joining the network are at levels not seen since Bitcoin was in bull market territory in mid-2021.
While this latest data is encouraging in the near term, Bitcoin has had many successes over the past few years that cannot be measured by any particular chart. On its journey to becoming a more legitimate asset, it is now recognized as a legal tender by two countries, multiple Fortune 500 companies now hold it on their balance sheets, and it has even caught the attention of the world’s largest asset manager, BlackRock. If such trends continue, it could lead to more demand from investors.
Game plan for bitcoin
Given these metrics, it’s hard not to get excited about Bitcoin’s future. For the first time in almost two years, there is tangible reason to be optimistic that this crypto winter may be unraveling. For these reasons, I predict that the Bitcoin price will continue to rise. Macroeconomic factors, trends in the private sector, and patterns from individual investors suggest that demand will outpace supply. And when an asset is subject to this phenomenon, it usually means great things to investors.
But for potential investors, there are better reasons to be excited. While address growth, transaction count, and miner revenue from fees are at levels not seen since Bitcoin’s price approached $60,000, its price today is less than half that. If this momentum continues, it could be a lucrative decision to buy Bitcoin today as its price is far from its all-time high.
The opinions in the article are those of the experts and are definitely not investment advice.
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