Key Takeaways:
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Power-law modeling shows Bitcoin generating strong long-term returns regardless of precise entry timing.
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Global liquidity sits above pre-cycle levels, supporting a more favorable macroeconomic backdrop.
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Bitcoin is currently trading at an unusually deep discount relative to its liquidity trends, with a fair value near $170,000.
A new bitcoin (BTC) simulated suggesting Long-term investors may be very concerned about the timing of their BTC purchases. In a detailed 10-year model, Bitcoin researcher Sminston has tested how a hypothetical investor who throws away $ 100,000 today can perform under three different entry points: the purchase of the $ 94,000 price, purchase 20% cheaper, or purchase 20% more expensive.
The model then projected the price of Bitcoin using the median power-law trend and assumed that the investor withdrew 10% of their holdings each year to save or spend.
To further assess the outcomes, the study includes three exit scenarios: selling at the expected median price in 2035, selling 20% above it, or selling 20% below it.
The results continue to be profitable. Even the “restless” path, ie, buying 20% above $94,000 and selling 20% below the expected median, still returned 300% to the remaining holdings after a decade of steady withdrawal. In total savings, the same investor will end up with 7.7x times the initial capital.
Meanwhile, investors who entered 20% below $94,000 saw a final total ranging from $1.15 million to $1.47 million, depending on their exit. The purchase at $ 94,000 produced outcomes between $ 924,000 and $ 1.18 million,
According to the researcher, the takeaway remains simple: While timing can boost returns, Bitcoin’s long-term power-law trajectory does most of the work. With that said,
“Don’t stress too much about the entry point. Allow time to do the heavy lifting.”
Related: $1T Crypto Market Drawdown Masks Bitcoin’s Strong Fundamentals: Coinbase Exec
The Global Liquidity Gap has reached rare extremes against Bitcoin
A new macroeconomic lens adds further context to the simulation’s long-term optimism. The last time Bitcoin exchanged Near current levels, global liquidity would be approximately $7 trillion less. Currently, total liquidity is estimated at $113 trillion, reflecting significantly looser financial conditions.
From a macroeconomic standpoint, higher global liquidity generally supports risk assets by improving credit availability and investor appetite. While not a guarantee of immediate upside, it does sign a more accommodative backdrop compared to the previous round.
Analysts also track an unusual disconnect between Bitcoin and global liquidity. According to JV Finance, the BTC liquidity gap widened to –1.52 standard deviations, a level rarely seen in bull markets.
This metric compares Bitcoin’s market value to where it “should” be trading relative to liquidity trends. A deep negative reading indicates Bitcoin is undervalued, undervalued, against macro conditions.
That gap for a while reached –1.68σ on November 17, the most severe undervaluation since the start of this bull cycle. While BTC can still dip lower in the short term, such deviations have historically increased the likelihood of long-term upside, with the current fair value for BTC estimated to be around $170,000 based on the liquidity model.
Related: Average Bitcoin ETF investors today underwater as BTC drops below $89.6k
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should do their own research when making decisions.
