Is it too late to invest in Bitcoin? Many people hear about Bitcoin and are intrigued by it, but they see the Bitcoin price and think it’s too expensive, and that they missed the boat.
But Bitcoin is different to all other assets, and even though the Bitcoin price is about $13,000 today, that shouldn’t be the metric you base your decision whether to buy Bitcoin or not.
There are many ways to determine whether an asset has any intrinsic value, and Bitcoin is no different. It’s all about doing some due diligence, but to understand what gives Bitcoin value takes a different approach from the old school valuation methods.
Unlike traditional stocks, Bitcoin doesn’t produce revenues, earnings or cash flows. So, metrics like price-to-earnings, price-to-sales, and cash flow are all irrelevant when working out if the Bitcoin to USD price is fair value.
There are ways for working out if the BTC price is fair and what its future projection looks like, however. Analysis models such as Metcalfe’s Law and the Stock-to-Flow (S2F) models, both follow a similar price trajectory.
Metcalfe’s Law suggests the Bitcoin price will be $100k by January 2024, and we will see a Bitcoin to USD $1 million by 2028.
Whereas, the S2F model is slightly more bullish with a Bitcoin price prediction of $288k at sometime around the end of 2021.
Both of these metrics should tell you it’s not too late to buy Bitcoin.
They both sound extremely hopeful, but the S2F model is absolutely on track at the moment. And if it maintains the same path during the next four-year halving cycle, we should see a Bitcoin to USD $1 million price by around 2026.
But there’s another metric that we can predict whether it’s too late to invest in Bitcoin.
The S-Curve Analysis Points Bitcoin To The Moon
If Metcalfe’s Law and Stock-to-Flow models are pointing to the moon, the S-Curve model is certainly backing them up. Although we can’t gage a price just from the S-Curve, we can see mass adoption leading to exponential growth.
The S-Curve is the classic adoption curve applied to new emerging technologies. It shows the time it takes for the adoption of a new technology to go from 0% to 10% is about the same time it takes for adoption to go from 10% to 90%.
At the start of the S-Curve, adoption resembles a lag phase where the technology is utilized only by the innovators.
This is followed by an early adoption phase, led by people who are more risk averse. After the early adopter phase, there comes the tipping point, where wide use of the technology seems inevitable.
The tipping point introduces the early majority who are still early but felt the excitement of the narrative. This is followed by the late majority and, then the holdouts who cap the S-Curve at pretty much full adoption.
If we apply the S-Curve theory to Bitcoin, then we could be in for an unbelievable rise in the next 11 years. Now, do you think its too late to buy Bitcoin?
S-Curve and Network Effect: Win Win
Bitcoin thrives from a network effect, as do many technologies, and if we compare Bitcoin to PCs, we can see the network effects and S-Curve play out with both.
A network effect uses Metcalfe’s Law, which states the effect of a network is proportional to the square of the number of connected users of the system (n2).
A typical example of this is the telephone. If I have a telephone, and nobody else does, my phone is useless. But if my friend gets a phone, and then my mum and dad get a phone, all of a sudden the phone is more useful. And obviously the more people that own a phone, the more useful my phone becomes.
The Bitcoin Network Effect will naturally give Bitcoin more value, and will help steepen the S-Curve.
Apple released their first PC in 1976, but in the early days the network effect didn’t offer much value to the PC market.
PCs didn’t really start to take off until about 1980. During 1980s adoption was relatively slow but by the end of the decade about 10% of Americans owned a PC.
The 10-90% main adoption curve for PCs took place from 1990-2000 and the Internet helped the PC network effect. And by the start of the new millennium about 90% of American households owned a PC.
If you had invested in a successful PC manufacturer before 1990 you would have made massive gains. For example, Microsoft was up 9,562%, and Dell gained a massive 89,000% in that same decade.
And as we can see with all new successful technologies, they all follow the S-Curve. Bitcoin is no different.
Is It Too Late To Invest In Bitcoin? We’re Just Entering The 10-90% Phase
Until 2017, hardly anyone believed in Bitcoin. It was called a fad, a fraud, drug dealers money, bla bla bla.
Today, about 8% of Americans own Bitcoin, from 0% in just 11 years. And every year since then, people have asked the same question: Is it too late to invest in Bitcoin?
Of course the answer to this is no, and we can assume billions more will begin to buy Bitcoin.
In fact, i we compare Bitcoin projected growth with other ground-breaking technologies, we can assume 90% of households will own Bitcoin by 2031.
The Bitcoin price is $13,000 today and that’s with just 8% of Americans owning some. But remember, Bitcoin is a global phenomena, and there is an estimated 100-200 million people globally that own some today.
In 2031, there will be billions of people using Bitcoin, and like any network effect, its value will grow exponentially.
The Bitcoin Narrative Is Changing As Corporate America Buys Bitcoin
The S-Curve is a proven method for innovative technologies, and the most significant gains are in the next few phases.
Bitcoin’s adoption rate is at about 10% globally, so we are very early in the adoption phase. However, as we can see with other technologies that have followed the S-Curve, adoption will accelerate quickly.
We’re seeing a narrative shift already. JP Morgan CEO Jamie Dimon called Bitcoin a fraud in 2017. Last week JPMorgan said ‘the long term potential for Bitcoin is considerable’ and they expect it to compete with gold as an alternative asset. A big narrative shift.
This is happening everywhere. Many legacy financial giants, such as Fidelity are building Bitcoin infrastructure and will soon start offering custody service for institutions.
PayPal has opened a Bitcoin service, which many believe legitimized the leading cryptocurrency. So the narrative tempo is moving quickly, along with the adoption curve.
Hedge fund managers, large custodians, publicly traded companies, wealth management firms, family offices are all buying Bitcoin. And of course, retail will continue to buy Bitcoin, just a faster rate as the S-Curve picks up.
It’s A Great Time To Invest In Bitcoin
At $13,000, Bitcoin seems expensive. But the price per Bitcoin is not the metric to look at, it should be the market cap.
Today, the Bitcoin market cap is $244 billion. Divide that by the circulating supply of just over 18.5 million and we get our Bitcoin price.
But remember, Bitcoin is a computer program, and if the creator Satoshi Nakamoto had made the fixed amount 21 billion instead of million, then today there’d be just over 18.5 billion. Divide that by Bitcoin’s market cap, and we’d have a $13 Bitcoin price. Not so expensive now, is it?
The Bitcoin price is cheap and I firmly believe it will be driven up by institutional FOMO over the coming years.
But of course, the Bitcoin price won’t go up forever. It will go up during the 10-90% adoption on the S-Curve and then remain steady. Which of course will be too late to invest in Bitcoin for big returns.
There are some bearish analysts out there, and it’s important for anyone to consider all sides of the narrative. This article shouldn’t be taken as investment advice because I am invested in Bitcoin. And I firmly believe the BTC price will follow the S-Curve, but I could be wrong.
Will we see a Bitcoin to USD $1 million this decade? I have no idea, but the way all central banks are trying to devalue their currencies, the world needs an uncorrelated asset to park value in.
It’s not too late to invest in Bitcoin, and I don’t think it will be anytime this decade. But expect big drops in the Bitcoin price on the way up.
Author: Tommy Limpitlaw
Bitcoin FAQs
There are several reputable Bitcoin exchanges operating in Spain. However, the most recommended exchanges are Kraken or BlockFi. Or you can buy Bitcoin from Bitcoin marketplaces, such as LocalBitcoins or Paxful. All of these exchanges and marketplaces are global with high liquidity and excellent customer service. Check out our reviews on each platform.
Yes. Every Bitcoin can broken down into 100 million bits. They are known as satoshis, after the pseudonymous creator Satoshi Nakamoto. And some companies will let you buy as little as $1 worth of Bitcoin, which at time of writing is worth about 11,000 satoshis. There are many companies that have a system for dollar cost averaging (DCA). This is a great way to buy Bitcoin, and is known in the space as ‘Stacking Sats’. Basically, what you do is set up small automatic, recurring payments to buy Bitcoin (or sats), and you DCA over time.
Nothing is really free, because even when you earn free Bitcoins you’re giving up your time, which is precious. But you can earn free Bitcoins. If you are a gamer, there are games like Bitcoin Bounty Hunt where you shoot your way to Bitcoin riches. Or there’s Carrot – a platform where you can earn free Bitcoin for doing tasks. Or you can save your Bitcoin in an interest bearing account and earn some Bitcoin interest. Be careful with interest bearing accounts, and only go with legitimate companies, though. I recommend Blockfi, you can read the review here.
Bitcoin is a decentralized money. A money that nobody can control or manipulate, and a money that nobody can print and devalue. It’s also not necessary for any third party to verify transactions, so it makes it much faster and cheaper to send value. It’s also money built on the Internet: a society of almost 5 billion people.
A Bitcoiner since 2017 and a Bitcoin Maximalist since 2018, Tommy is our main writer and editor at Bitcoin Maximalist. Other than researching and writing about Bitcoin, Tommy loves spending time with his family and supporting his beloved Leeds United.
