Bitcoin (BTC) should cost at least $55,000 per coin according to one metric measuring its so-called “supply shock.”
In a tweet on Sep. 5, analyst Willy Woo highlighted what he added is a “conservative” price estimate for BTC/USD.
The Bitcoin price is playing catch-up to metrics
While Bitcoin has still not established $50,000 as firm support, on-chain metrics have been much more firmly bullish for some time.
The so-called “supplyhock valuation model” now joins them, giving a conservative estimate of $55,000.
Supply shock simply refers to the insufficient BTC supply divided with the available BTC stock. This is more than you might think. Woo uses it to “wave a magic hand” and gauge investors’ intentions before any bids or offers are made.
“In this view of demand and supply, an investor who has no intention to sell is on the demand side while an investor who is willing to sell is on the supply side,” he explained in a blog post last month.
Additionally, the valuation model uses an algorithm that compares similar supply and demand situations to produce a fair price estimate.
Woo tweeted that “it’s conservative as one SS metrics, exchange SS is now above all time-high so there is no look back,” referring to the record-breaking ratio of coins in cold stock to those on exchanges.
The chart below shows how Bitcoin price has changed with and without investor intent shifts.
First hurdle for bulls: $50,000
Due to the fact that 2021 is the year after a block subvention halving event, Bitcoin supply shock is a common phrase in the current market.
With miners now unlocking just 6.25 BTC per block, so far, Bitcoin has behaved broadly similarly to previous post-halving years — 2013 and 2017.
The conservative $55,000 minimum target nonetheless remains above another set of monthly close minimums from analyst PlanB, who guesses that September will have a minimum monthly close of $43,000.
Thereafter, however, upside resumes in earnest, with Bitcoin closing out 2021 on at least $135,000.
The BTC/USD trades at $50,200 at the time of writing. This is a close range that remained throughout the weekend.
