JAKARTA - According to one metric that measures the so-called “supply shock” Bitcoin (BTC) could cost at least US$55,000 per coin.
In a tweet on September 5, analyst Willy Woo highlighted what he added as a “conservative” price forecast for BTC/USD.
While Bitcoin still hasn't hit $50,000 as strong support, on-chain metrics have been much stronger for some time.
Now, the so-called "supply shock assessment model" has joined them, providing a conservative price estimate of $55,000.
A supply shock is simply the supply of unavailable BTC divided by the supply of available BTC. This is deeper than at first glance, as Woo uses it to effectively “swing the magic wand and gauge investor intentions before bids and offers are placed.”
“In this supply and demand view, an investor who has no intention to sell is on the demand side whereas an investor who is willing to sell is on the supply side,” Woo explained in a blog post last month.
Valuation models also use algorithms to compare supply and demand situations that are similar to the current one, resulting in a fair price estimate.
“This is conservative as one of the SS metrics, the SS exchange, is now above an all-time high so there is no possibility of looking back,” Woo said in a tweet, referring to the ratio of coins on cold storage compared to those on exchanges at record levels.
Bitcoin supply shock is a frequently used phrase in the market today thanks to 2021 being the year after the block subsidy halving event.
With miners now only opening 6.25 BTC per block, so far, Bitcoin has behaved broadly similar to its previous post-halving years — 2013 and 2017.
The conservative minimum target of $55,000 remains above another set of monthly closing minimums from PlanB analysts, who forecast that September will have a minimum monthly close of $43,000.
After that, however, the bulls continued, with Bitcoin closing in 2021 with at least $135,000, a value that would be bitcoin's all-time record.
At the time of writing, BTC/USD is trading at 50,200 US dollars, having been in a tight range all weekend.
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