Bitcoin Highly Undervalued, Raoul Pal Shows In New Price Analysis
Macro guru and Real Vision CEO Raoul Pal once again put out an original take on Bitcoin’s recent price action, by comparing it to leading e-commerce firm Amazon.
Speaking to his more than 800,000 rich audience on Twitter, the former Goldman Sachs executive makes an analysis of the two with reference to Metcalfe’s Law, which says that the value of a communications network is proportional to the square of the number of its users. In other words, a network’s value grows alongside its adoption of new users.
Just a reminder – You cant use daily or weekly charts if your time horizon is years. You’re either in this for network adoption over time or you are a trader. I am not a trader in crypto. I can’t care less about 50% swings in a 70 vol asset.
— Raoul Pal (@RaoulGMI) January 8, 2022
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According to Pal, Bitcoin’s price action of the last year resembles that of Amazon, which was a highly volatile stock in the early years. He makes a head-to-head comparison of the long term charts and also chips in the short term ones. The two show identical patterns and Pal therefore believes that the current bull-run is unlikely to end, despite its December setback.
Pal actually goes as far to note that Bitcoin is highly undervalued in current times with a price of just above $40,000. He illustrates it by including a chart with a over $100,000 Metcalfe Value, stating that:
“BTC is cheap vs Metcalfe’s Law….(and has been for a long time – my guess is because there is less network applications on BTC currently than ML would prefer).”
While he considers it highly unlikely, commenting on Bitcoin’s similarities to Amazon stock price in its early years, Pal does note that there is a possibility of the top cryptocurrency making a correction to as much as $30,000, after which it can move up rapidly.
“After this Amazon went up….fast. As BTC is more volatile is goes up more and falls more in corrections. But as AMZN and other have proven Network Stocks over time see shorter cycles and less downside. I think we are going to see that in BTC & ETH too”
Pal ends his online lecture on a humbling note:
“In the end, it’s all noise. The log chart is The Truth and that is in itself an approximation of Metcalfe’s Law. If it isn’t noise to you, your position is too big for your time horizon. Good luck and take a chill pill.”
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Source: igaming
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