Key Points:
Power law modeling shows that Bitcoin can deliver strong long-term returns regardless of the specific entry point.
Global liquidity is significantly higher than in the previous cycle, providing a more favorable support for the macroeconomic environment.
Currently, Bitcoin is deeply undervalued compared to its liquidity trend, with a fair value close to $170,000.
According to reports, a new Bitcoin simulation study suggests that long-term investors may be overly concerned about the timing of their purchases. In a detailed 10-year model, Bitcoin researcher Sminston With tested the performance of hypothetical investors who invested $100,000 today at three different entry points: buying at $94,000, buying 20% cheaper, or buying 20% more expensive.
The model then predicted Bitcoin prices based on the median power law trend, assuming that investors withdraw 10% of their holdings each year for savings or consumption.
To further stress test the results, the study also set up three exit scenarios: selling at the predicted median price in 2035, selling 20% higher, or selling 20% lower.
The results were consistently profitable. Even the "least fortunate" path, which involved buying 20% above $94,000 and selling 20% below the predicted median, still yielded a 300% remaining holding return after ten years of steady withdrawals. In total savings, the same investor would ultimately receive 7.7 times their initial capital.
Meanwhile, investors who entered 20% below $94,000 would end up with a total between $1.15 million and $1.47 million, depending on their exit situation. The results for those who bought at $94,000 ranged between $924,000 and $1.18 million.
According to the researchers, the conclusion remains simple: while timing can enhance returns, Bitcoin's long-term power law trajectory does most of the heavy lifting. With wrote:
Zerohedge/X data shows that from a macroeconomic perspective, this simulation result appears even more optimistic. The last time Bitcoin traded near current levels, global liquidity was about $7 trillion lower. Currently, total liquidity is estimated at $113 trillion, reflecting a significantly loose financial environment.
From a macroeconomic standpoint, higher global liquidity typically supports risk assets by improving credit availability and investor appetite. While immediate price increases cannot be guaranteed, it indicates a more accommodative backdrop compared to the previous cycle.
Analysts are also tracking the unusual disconnection between Bitcoin and global liquidity. According to JV Finance, the Bitcoin liquidity gap has widened to -1.52 standard deviations, a rare level during bull markets.
This metric compares Bitcoin's market value to the level it "should" trade at relative to liquidity trends. Deep negative values indicate that Bitcoin is undervalued relative to macro conditions, rather than overvalued.
On Monday, this gap briefly touched -1.68σ, marking the most extreme undervaluation level since the start of this bull market. Although BTC may still experience short-term fluctuations downward, historical data shows that such deviations often increase the probability of long-term price increases. Currently, based on this liquidity model, Bitcoin's fair value is approximately $170,000.
Related: Analysts: Cathie Wood's ARK Invest significantly increased holdings in Circle, BitMine, and Bullish during the decline of crypto stocks.
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