Fidelity Exec Unveils Groundbreaking Bitcoin Valuation Model

In a recent series of posts on X (formerly Twitter), Jurrien Timmer, Fidelity's director of global macro, has unveiled a groundbreaking Bitcoin valuation model that could potentially redefine the cryptocurrency's place in the global financial landscape.

Timmer's analysis, which is deeply rooted in historical financial data stretching back to 1700, juxtaposes the price changes and volatility of traditional stores of value such as gold and silver against the nascent, yet rapidly evolving Bitcoin. 

Exploring historical volatility  

Timmer's analysis draws a vivid picture of how gold and silver's volatility patterns have changed post-1970, marking the transition to a fiat currency system. 

This era has seen these precious metals, and more recently Bitcoin, react dynamically to various monetary and inflation regimes. 

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A key insight from Timmer's work is the introduction of "excess money" as a variable that is defined as the growth rate of the money supply minus GDP growth. 

This concept helps to explain the significant price movements observed in the chart.

It showcases the increased volatility and valuation during times of heightened money supply growth relative to economic output.

Bitcoin's position as "exponential gold"

As reported by U.Today, Timmer previously positioned the cryptocurrency as "exponential gold," drawing parallels between its meteoric rise and traditional stores of value. 

By examining the purchasing power of fiat currency over the last 150 years, Timmer has illustrated Bitcoin's explosive growth compared to the more gradual appreciation of gold and silver. 

Timmer has repeatedly emphasized the importance of Bitcoin's capped supply and its role in the asset's valuation but points out that the real appeal lies in its network growth, following an S-curve of adoption similar to other groundbreaking technologies.