Recently, Jurrien Timmer, Director of Global Macro at Fidelity Investments, shared his latest thoughts on Bitcoin.

Timmer took to Twitter on January 25 to call the past month a “bad trip for crypto,” noting that “the GS Bitcoin-sensitive equity basket already took out its 2021 lows.” The analyst said such a fall was “not a great sign” for Bitcoin and that the price had even breached his original prediction of a $40K bottom based upon the demand model and on-chain dynamics. 

Despite the price’s doom and gloom, Timmer noted that Bitcoin often overshoots its upside and downside, which could explain the fall to $33K earlier in the week. 

Based upon Timmer’s demand model, Bitcoin’s fundamentals are still strong and the price of $BTC has become more undervalued as the price continues to drop. He also noted that short-term momentum for Bitcoin was showing a bullish divergence on the charts. 

Timmer concluded that Bitcoin was caught up as a victim in the liquidity storm sweeping the broader stock market, causing the price to overshoot its predicted bottom. Unlike non-profitable tech stocks, Timmer said that Bitcoin’s fundamental underpinning would continue to make it “more compelling over time.”

Back in December 2021, Timmer compared the network growth of Bitcoin and Ethereum:

On 1 March 2021, he published a 12-page research paper on Bitcoin (title: “Understanding Bitcoin: Does bitcoin belong in asset allocation considerations?”).

Timmer started by saying that he intended his paper to serve as “a brief plain-English primer, but also to assess, in a meaningful way, the value proposition of bitcoin as it relates to asset allocation.”

After his study of Bitcoin, some of the conclusions he came to are as follows:

  • “… bitcoin has gone mainstream, already considered a legitimate asset class by more and more investors.“
  • “… bitcoin has both a compelling supply dynamic (S2F) and demand dynamic (Metcalfe’s Law).“
  • “… bitcoin is gaining credibility, and as a digital analog of gold but with greater convexity… bitcoin will, over time, take more market share from gold.“

Timmer said that “if gold is now competitive with bonds, and bond yields are near zero (or negative), perhaps it makes sense to “to replace some of a portfolio’s nominal bond exposure with gold and assets that behave like gold.”

He finished by saying:

“If bitcoin is a legitimate store of value, is scarcer than gold, and comes complete with a potentially exponential demand dynamic, then is it now worth considering for inclusion in a portfolio (at some prudent level and at least alongside other alternatives, such as real estate, commodities, and certain index-linked securities)?

“Despite the many risks discussed—including such factors as volatility, competitors, and policy intervention for some the answer may well be ‘yes,’ at least insofar as that ‘yes’ applies only to components on the 40 side of 60/40. For those investors, the question of bitcoin may no longer be ‘whether’ but ‘how much?’.“

Disclaimer

The views and opinions expressed by the author, or any people mentioned in this article, are for informational purposes only, and they do not constitute financial, investment, or other advice. Investing in or trading cryptoassets comes with a risk of financial loss.

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