Supply Shock Valuation Model and the Price of Bitcoin

The world’s largest cryptocurrency should cost at least $55,000 per coin according to one metric measuring its so-called “supply shock”. Even though Bitcoin has still not established $50,000 as firm support, on-chains metrics have been much more firmly bullish for some time.  Furthermore the so-called “supply shock valuation model” joined them, giving a conservative price estimate of $55,000. 

It is not that hard to learn more about the so-called “supply shock”. Notably, it is simply the unavailable BTC supply divided by the available BTC supply. Also, this model is using an algorithm to compare similar supply and demand situations to now. Hence, producing a fair price estimate.

On September 5, analyst Willy Woo highlighted what he added is a conservative price estimate for BTC/USD. This goes deeper than at first glance, as analyst Woo uses it to effectively “wave a magic wand and gauge the intent of investors before the bids and offers are even placed”. 

Bitcoin and risk factors 

Bitcoin supply shock is a very popular phrase in 2021. It gained popularity after a block subsidy halving event. With crypto miners now unblocking just 6.25 BTC, so far, the major cryptocurrency behaved broadly to the previous post-halving events. The previous events took place in 2013 as well as in 2017.

But the conservative $55,000 minimum target remains above another set of monthly close minimums from analyst PlanB. This analyst expects that September will have a minimum monthly close of $43.000. 

Next, nevertheless, upside resumes in earnest, with Bitcoin closing out 2021 on at least $135,000. 

Binance and Singapore 

On Sunday, Binance announced that it will rock back product offerings in Singapore due to warnings from financial regulators. People in Singapore will no longer be able to trade cryptocurrencies or receive payments denominated in the Singapore dollar (SGD). 

Binance stated that all SGD trading pairs will be removed at 04:00 UTC on September 9. The major crypto exchange recommended users complete all peer-to-peer trades 24 hours in advance of the deadline.

It has to deal with various challenges all over the world. Germany, Japan, as well as the U.K. all cracked down on the crypto exchange this summer. South Africa’s Financial Sector Conduct Authority warned people that Binance is not authorized to operate in the country. In spite of all problems, Binance’s global exchange processes more trades than any other platform.