In a prediction released via X on Friday, Timothy Peterson, a respected network economist and prominent author in the field of crypto analysis, predicted an almost certain increase in the price of Bitcoin in the next 8 months. “There is a 90% chance that Bitcoin will reach a new ATH before March 2025,” Peterson proclaimed.
Peterson, known for his work including “Metcalfe’s Law as a Model for Bitcoin’s Value,” bases his prediction on the analytical framework detailed in his research paper titled “Future Lowest Price: Why Bitcoin’s Price Never Looks Back.” This paper, first published in 2019 and subsequently revised, presents a novel approach to understanding Bitcoin’s price trajectory by focusing on its historical lowest prices, known as the “Never Look Back Price” (NLB). This NLB marks the last time Bitcoin traded at a certain price, after which it never fell to that level again.
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The methodology employed by Peterson involves plotting these NLB data points on a lognormal scale adjusted by what he calls a “square root of time” scale. This unconventional metric facilitates deeper insight into Bitcoin’s long-term growth patterns, effectively comparing them to the diffusion processes observed in technology adoption in other domains.
Bitcoin adoption is key
At the heart of Peterson’s analysis is Metcalfe’s Law, which he elaborates as “the value of the network is proportional to the square of the number of its users.” Applying this principle to Bitcoin, Peterson posits that as the digital currency’s user base expands, its intrinsic value is expected to increase exponentially. The paper details the use of a “square root of time” model to align traditional concepts of monetary value over time with the non-linear growth rates typical of network economics, presenting a compelling case for Bitcoin. future evaluation trajectories.
Peterson’s approach notably incorporates elements of conservative financial analysis, emphasizing Bitcoin’s historical low prices. “By focusing on the lowest price, the analysis inherently adopts a conservative stance, underestimating rather than overestimating value,” Peterson notes, which helps “minimize the risk of overvaluation and ensures that predictions are not overly based on optimistic scenarios that may not materialize.”
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In his paper, Peterson also addresses potential market anomalies and manipulations that can distort price perceptions. By focusing on NLB, the analysis filters out these distortions, offering a purer view of Bitcoin’s valuation, unaffected by short-term speculative pressures or external shocks such as the COVID-induced market anomalies of 2021.
The prediction of a new historical record before March 2025 reflects a broader sense of confidence in the sustained growth of the Bitcoin network on Peterson’s part. As adoption curves continue to rise and network effects further cement Bitcoin’s value, the prediction is not merely speculative but based on quantifiable and observed historical trends.
Peterson concludes: “As long as adoption continues, the value of Bitcoin – represented by the price of NLB – will increase. If adoption suffers, the price will stagnate or decline.”
At the time of writing, BTC was trading at $58,192.
Featured image created with DALL·E, chart from TradingView.com