According to one measure of Bitcoin’s “supply shock,” it should be at least $55,000 per bitcoin
Analyst Willy Woo shared a tweet from Sep. 5 that highlighted what he called a “conservative price estimate” for BTC/USD.
The Bitcoin price is playing catch-up to metrics
Bitcoin is still far from having $50,000 of firm support but on-chain metrics are much more bullish than before.
The so-called “supplyhock valuation model” now joins them, giving a conservative estimate of $55,000.
Supply shock simply refers to the insufficient BTC supply divided with the available BTC stock. This is more than you might think. Woo uses it to “wave a magic hand” and gauge investors’ intentions before any bids or offers are made.
He explained that an investor with no intent to sell is on demand, while one who has the intention to sell is willing to sell in a blog posting last month.
Additionally, the valuation model uses an algorithm that compares similar supply and demand situations to produce a fair price estimate.
Woo tweeted that “it’s conservative as one SS metrics, exchange SS is now above all time-high so there is no look back,” referring to the record-breaking ratio of coins in cold stock to those on exchanges.
The chart below shows how Bitcoin price has changed with and without investor intent shifts.
Model for Bitcoin supply shock valuation Source: Willy Woo/Twitter
First hurdle for bulls: $50,000
Due to the fact that 2021 is the year after a block subvention halving event, Bitcoin supply shock is a common phrase in the current market.
Related: It’s more like’shock to-flow’ — BTC price hits bull trigger when mystery buyers take over supply
Bitcoin is now at 6.25 BTC per Block, which is roughly the same as previous post-halving years (2013 and 2017).
However, the $55,000 target is still conservative and above another set minimum monthly closes by analyst PlanB. PlanB predicts that September will see a minimum monthly close close of $43,000.
The upside began to return in earnest after that, with Bitcoin closing 2021 at least $135,000.
The BTC/USD trades at $50,200 at the time of writing. This is despite the fact that it remained in a tight range over the weekend.
BTC/USD 1-day candle chart (Bitstamp). Source: TradingView