Bitcoin (BTC) is currently trading around 116,800 USD, but according to the founder of Capriole Investments – Charles Edwards, Bitcoin could reach a price of up to 167,800 USD if its value aligns with 'energy value'.
In a post on X on Thursday (August 7), Edwards calculated that the true value of Bitcoin is approximately 45% higher than the current price of 116,000 USD.
'The 'fair value' of Bitcoin requires a price increase of 45%'
Bitcoin miners hold the key to making extremely optimistic BTC price forecasts, with predictions that the BTC/USD price could rise by nearly 50%.
The 'Energy Value' index of Bitcoin, developed by Capriole in 2019, posits that the accurate value of Bitcoin, or 'fair value', is 'a function of energy input, supply growth rate, and a constant representing the value of energy measured in fiat dollars.'
Although this means that BTC/USD would be zero if miners completely stopped participating in the network, the current hashrate indicators suggest that Bitcoin is not worthless.
Data from the analysis platform Glassnode shows that the current hashrate value is at 1.031 zettahash per second (ZH/s), with the most recent all-time high recorded on August 4.
'Hashrate is soaring and the energy value of Bitcoin just hit 145,000 USD,' Edwards shared, referring to the SMA (Simple Moving Average) indicator of this metric.
'That puts the current price at a 31% discount to fair value.'
The energy value of Bitcoin has reached a high of 167,800 USD. The fundamental factors of the network are currently in significant contrast with the price, as Bitcoin's price has dropped nearly 10% from last month's historical peak.
'We are trading at a deeper discount to the fair value today at 116,000 USD, compared to when Bitcoin was only at 10,000 USD in September 2020,' Edwards added.
Additionally, many market participants have suggested that the current Bitcoin price surge has only a few months left. This means that the BTC price has very little time to match its Energy Value assessment, and this value will decrease if miners reduce the amount of energy they use.
'Continuous energy input represents the balance between supply and demand. High market prices encourage increased energy input through the development of hash power and technological advancements, leading to higher energy efficiency,' Capriole stated in the introduction to this indicator.
'For this reason, large price increases in the market often lead to a long-term increase in committed energy and thus an increase in the energy value of Bitcoin. However, when speculators push the price up without a corresponding increase in energy input, the value will often collapse back to the energy value.'
Bitcoin's Hash Ribbons indicator continues to reinforce a positive outlook for both miners and price performance after its 'buy' signal was activated at the end of July.