Cane Island Investment Director Timothy Peterson shed light on the recent increase in the price of Bitcoin. He explained this phenomenon using Metcalfe's Law, a principle used in network theory that states that the influence of a network is proportional to the square of the number of users connected to the system.
According to Peterson, the ETFs' assets increased by 15% in just one month. It suggests that this increase should theoretically lead to a price change (%dP) of approximately 28%, calculated using the formula:
This formula, known as the “rule of twos”, is derived from the concept explained in the article “Why Bitcoin Dominates”.
To put this in perspective, the price of Bitcoin was $41,000 last month and has risen to $52,000 today. This represents an actual price change of 27% calculated using the formula: 52/41-1=27%”
Peterson also noted that if ETFs support new user growth of 7% per month (which is half the current rate), the price change by December could be a staggering +300%, potentially leading to a Bitcoin price of around $150,000 to $200,000 argues.
However, Peterson emphasizes that these figures are not estimates, but hypothetical calculations based on current trends and growth rates. As always, the cryptocurrency world is subject to fluctuations and investors should proceed with caution.
*This is not investment advice.
