Bitcoin Network Fundamentals Could Sustain $265,000 Price, CryptoQuant CEO Explains

Keshav Verma

1 year ago

3 mins read

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The CEO of analytics firm CryptoQuant has explained how the Bitcoin network fundamentals could support a market cap three times the current size.

Bitcoin Hashrate/Market Cap Ratio Could Reveal Ceiling For Cycle

In a new post on X, CryptoQuant founder and CEO Ki Young Ju has talked about what the network fundamentals could reveal about how much more market cap Bitcoin can sustain.

BTC is a cryptocurrency that runs on the proof-of-work (PoW) consensus mechanism, meaning that validators called miners compete with each other using computing power to get the chance to add the next block to the blockchain.

Miners have to pay constant electricity costs to run this computing power. Generally, these chain validators do so by selling their block rewards. These rewards are fixed in BTC value and given out at a more or less constant rate, so the main variable in miner finances is the asset’s USD value.

Mining-related economics are very much related to the cryptocurrency’s price. A metric central to the miners is the Hashrate, a measure of the computing power this cohort has connected to the Bitcoin blockchain.

Below is a chart that shows the trend in the 7-day average value of this BTC indicator over the past year.

The value of the metric seems to have been going down in recent days | Source: Blockchain.com

As the graph shows, the Bitcoin Hashrate has been riding an uptrend during this period, largely due to the rally that the asset’s price has enjoyed in this window.

To relate this fundamental metric with the price of the asset, the CryptoQuant CEO has referred to the “Hashrate/Market Cap Ratio,” which is an indicator that keeps track of how the market cap (that is, the total valuation) of the cryptocurrency compares against its Hashrate.

Here is the chart shared by Ju that shows the trend in this metric over the last few years:

Looks like the value of the metric has been at relatively low levels recently | Source: @ki_young_ju on X

The graph shows that the Bitcoin Hashrate/Market Cap Ratio has been at low levels compared to the highs the metric achieved during the 2021 bull run.

This is despite the fact that the asset’s price is currently at similar levels to back then. The reason behind this trend is that the network’s Hashrate is now more than three times what it was then.

If the ratio’s high from the previous cycle top is where the cycle peak will also be observed this time around, then it means that the asset’s market cap could increase over three times from its current value.

Based on this, Ju suggests that the current network fundamentals could potentially sustain a price of $265,000.

BTC Price

At the time of writing, Bitcoin is trading at around $62,300, up more than 9% over the past week.

The price of the coin appears to have registered a drawdown over the last few days | Source: BTCUSD on TradingView

Featured image from Kanchanara on Unsplash.com, CryptoQuant.com, Blockchain.com, chart from TradingView.com

Keshav Verma

Keshav is currently a senior writer at NewsBTC and has been attached to the website since June 14, 2021.

Keshav has been writing for many years, first as a hobbyist and later as a freelancer. He has experience working in a variety of niches, even fiction at one point, but the cryptocurrency industry has been the longest he has been attached to.

In terms of official educational qualifications, Keshav holds a bachelor’s degree in Physics from one of the premier institutes of India, the University of Delhi (DU). He started the degree with an aim of eventually making a career in Physics, but the onset of COVID led to a shift in plans. The virus meant that the college classes had to be delivered in the online-mode and with it came free time for him to explore other passions.

Initially only seeking to make some beer money, Keshav unexpectedly landed clients offering real projects, after which there was no looking back. Writing was something he had always enjoyed and to be able to do it for a living was like a dream come true.

Keshav completed his Physics degree in 2022 and has been focusing on his writing career since, but that doesn’t mean his passion for Physics has ended. He eventually plans to re-enter university to obtain a masters degree in the same field, but perhaps only to satiate his own interest rather than for using it as a means to find employment..

Keshav has found blockchain and its concepts fascinating ever since he started going down the rabbit-hole back in 2020. On-chain analysis in particular has been something he likes to research more about, which is why his NewsBTC pieces tend to involve it in some form.

Being of the science background, Keshav likes if concepts are clear and consistent, so he generally explains the indicators he talks about in a bit of detail so that the readers can perhaps come out having understood and learnt something new.

As for hobbies, Keshav is super into football, anime, and videogames. He enjoys football not only as a watcher, but also as a player. For games, Keshav generally tends towards enjoying singleplayer adventures, with EA FC (formerly FIFA) being the only online game he is active in. Though, perhaps due to being ultra-focused on the game, he is today a semi-pro on the EA FC scene, regularly participating in tournaments and sometimes even taking back prize money.

Because of his enthusiasm for anime and games, he also self-learned Japanese along the way to consume some of the untranslated gems out there. The skill didn’t merely remain as just a hobby, either, as he put it to productive use during his exploration for small-time gigs at the start of COVID, fulfilling a couple of Japanese-to-English translation jobs.

Keshav is also big into fitness, with agility and acceleration-related workouts making a big part of his program due to the relevance they have in football. On top of that, he also has a more traditional strength based program for the gym, which he does to maintain an overall fitness level of his body.

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