Charles Edwards from Capriole Investments says that despite current negativity, Bitcoin (BTC) is realistically valued at $45,000. The narrow range of $25,500 to $26,500 in Bitcoin’s price may leave traders undecided about the next direction the asset could take.
Expert Opinion on Bitcoin
However, Charles Edwards, the founder of Capriole Investments, believes that Bitcoin’s current price presents a low-risk, long-term buying opportunity. Edwards’ view is based on Bitcoin’s production cost and energy value. Capriole Investments’ energy value theory gives a fair value price of $47,200, and Edwards reiterated his bullish stance by stating that Bitcoin’s production cost predicts a base price of around $23,000 with 100% accuracy.
The risk-reward ratio of the trade is 1:5, with potential for even higher price targets. However, Edwards added that this is based on the assumption that the price will stay at fair value, which has never happened before. Edwards introduced the energy value theory of Bitcoin in December 2019, which suggests that Bitcoin’s fair value can be estimated by the amount of energy required to produce it.
Mining Data in Bitcoin
The amount of energy consumed in Bitcoin mining has increased due to mining companies increasing their capacities with the installation of new ASICs and preparing for the halving in April 2024. According to Edwards, Bitcoin’s energy value reflects its fair value.
Bitcoin’s energy value has shown a strong correlation with its spot price, which could indicate the validity of the theory to some extent. However, there are some caveats in the theory. One limitation is that Bitcoin’s energy value is not always accurate, as mining energy efficiency can change over time. Additionally, the theory does not take into account other factors that could affect Bitcoin’s price, such as the market’s current supply and demand and the steps taken by miners before the upcoming halving next year.