When is the best time to buy Bitcoin? Here's how to analyze Bitcoin's price.

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The value of all cryptocurrencies in the market has now surpassed a trillion dollars, and Bitcoin has become the 5th most traded currency in the world. So should you buy bitcoin now, or wait? When I started investing and buying Bitcoin, I didn’t know how to even look at the price and relate it back to anything that I understood and I hard time because Bitcoin is not like stocks. At least in the stock market, you can look at things like the balance sheet, cash flow, sales growth, dividends, payout ratio, debt levels, etc. But Bitcoin is a commodity so how do you judge it's true price?

Let’s start start with the fundamental analysis then we’ll go macro. Fundamental means judging something based on measurable, factual data to see if something is under priced or over priced. Macro is piecing all the bits & pieces together with what’s going on. So the first metric is going to be on chain data specifically we’re gonna take a look at:

1. Transaction Volume - What transaction volume is, is a measure of how much people are using Bitcoin. Why is that important? It’s important because we need to know, are people actually using this technology or are they just speculating on the price?

If you go to blockchain.com/charts, you’ll see that graph where it shows you transactions per day. Click on "all time" data. When you do that, you’ll see that since Bitcoin was created in 2009, the transaction volume has been steadily growing. This is very good. This tells us the network effect that is Bitcoin’s blockchain is increasing and the technology is becoming more adopted and accepted.

2. Wallet Data - when you buy a Bitcoin, you are given a unique wallet address where your Bitcoins are held. So again, let’s use blockchain.com and look at their wallet data. From 2011 all the way to 2021 the present day, we have roughly 64.7 million unique wallets. The more unique wallets that are created, the more we can see the network effect grow. Network effect is important because it cannot be copied over by simply copying and pasting the code of Bitcoin. That's what makes Bitcoin unique from all the other cryptocurrency.

3. Hash rate - The textbook definition is it’s a way to measure the processing power of the Bitcoin network. There’s 42 million millionaires out there in the world, and only 21 million Bitcoins in existence that will ever be made. So how much of the price is inflated, versus the technology actually being used and adopted? Let’s jump back into blockchain.com and find the hash rate chart. You can see over a decade, it’s grown exponentially which is usually how technology gets adopted. Good technology usually doesn’t go in a linear line, it’s exponential and the current hash rate of Bitcoin is sitting around 151 tera hashes per second - which means the Bitcoin network can process 151 trillion calculations per second.

All of this data shows us that Bitcoin's price increase is supported by real measurable growth. Now let's take a look at some macro analysis.

Whenever we’ve created any kind technology, whether it’s been the microwave, the refrigerator, the cellphone, the internet - they all followed the same general path of adoption - the S Curve. The S Curve is a way to measure how long it takes for technology to penetrate the market (couldn’t help myself). Once the inflection point of an S curve happens - the adoption takes off to the masses into exponential growth.

Last year in 2020 Bitcoin did around a trillion dollars of on chain transaction volume, that is more than Apple Pay, Venmo, or PayPal. That shows me that It’s at this point in the phase of technology where the growth becomes exponential. I think we are still in the early adopters phase just about to begin the exponential growth this decade from the years 2021 to around 2030. Other investor catalysts include regulation, a Bitcoin ETF, and institutional / bank buying.

*None of this is meant to be construed as investment advice, it's for entertainment purposes only. Links above include affiliate commission or referrals. I'm part of an affiliate network and I receive compensation from partnering websites. The video is accurate as of the posting date but may not be accurate in the future.

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