Current Bitcoin Hashrate Can Sustain $4.9 Trillion Cap, CryptoQuant CEO Reveals
The founder and CEO of on-chain analytics firm CryptoQuant explains where Bitcoin’s market capitalization will peak based on current computing power.
Depending on the network’s computing power, Bitcoin could be capped at this level
in a new postal At X, CryptoQuant founder and CEO Ki Young Ju discussed a BTC pricing model that uses trends in mining power to set upper and lower limits on cryptocurrency prices.
this Mining computing power This refers to a metric that tracks the total computing power of miners currently connected to the Bitcoin blockchain.
Miners use their computing power to compete with each other to be the first to solve certain mathematical puzzles and are compensated with block rewards.
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Given that Bitcoin would not exist without miners, or at least would not be as secure without a decentralized network, some believe that the intrinsic value of a cryptocurrency can be measured using computing power.
After all, Bitcoin miners have to pay ongoing electricity bills to host computing power, and they’re only willing to run as many farms as it’s worth.
The chart below shows that BTC mining hash rate has been rising recently and has reached an all-time high (ATH).
The reason behind this uptrend is the rebound that the asset has been observing; price is the main variable in the revenue of these chain validators because block subsidy The BTC they receive will naturally fluctuate accordingly.
Speaking of block subsidies, one feature of the BTC network is that its value is permanently halved approximately every four years, an event known as the “block subsidy.” halved. The consequence of the halving is that the income of Bitcoin miners continues to decline.
The pricing model shared by Young Ju takes this fact into account by adjusting mining power. The metric then takes the ratio of market cap to adjusted hashrate and determines the highest and lowest values ​​for that ratio in the asset’s history.
Below is a chart from the model showing what the asset’s market capitalization needs to be for the ratio to equal one of these extreme values:
As shown in the figure above, the maximum potential market value of Bitcoin based on the current network computing power value is close to 5 trillion US dollars. The asset’s market cap is just under $1.9 trillion, meaning it’s only 38% of that cap.
But it’s worth noting that the 2021 bull market top occurs just below the model’s top line. Therefore, the top of the current cycle may not touch this line either. That said, the market capitalization at that time was indeed closer to the peak ratio than it has been so far this cycle, which at least indicates that there is still room for BTC to rebound.
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One peculiar feature in the chart is that they have some sudden declines in 2016, 2020, and 2024. These naturally correspond to the halving events that occurred in those years and reflect their economic impact on Bitcoin mining.
bitcoin price
As of this writing, Bitcoin is trading around $94,400, up more than 2% in the past seven days.
Featured images Dall-E, CryptoQuant.com, Blockchain.com charts from TradingView.com
