• Bitcoin’s price is currently trading in a tight range between $25,500 and $26,500.
• Charles Edwards, founder of Capriole Investments, believes that Bitcoin’s current price presents a low-risk long-term buying opportunity.
• Capriole Investments’ energy value theory gives a fair value price of $47,200, based on Bitcoin’s production cost and energy value.
• Edwards also stated that Bitcoin’s production cost gives a floor price estimation of around $23,000 with a 100% hit ratio.
• The trade has a risk-reward ratio of 1:5, with the potential for even higher price targets.
• Edwards added that this assumption is based on the rally price stopping at fair value, which it never has.
Bullish energy value theory
• Edwards proposed Bitcoin’s energy value theory in December 2019.
• According to the theory, the fair value of Bitcoin can be estimated by the amount of energy it takes to produce it.
• The model assumes that the more work put into something, the more valuable it is.
• The amount of energy spent in Bitcoin mining has been increasing in 2023 as mining companies expand their capacity and share of hash rate.
• Bitcoin’s energy value has shown a strong correlation with its spot price.
• However, there are limitations to the theory, such as variations in mining energy efficiency over time and the influence of other factors like market demand and supply.
Bitcoin looks primed for further downside
• Bitcoin’s spot liquidity data on Binance suggests that buyers are looking at the $24,600 level for support.
• The bullish momentum appears to be fading as most traders are crowding around the yearly low levels.
• Futures orders liquidation levels show that buyers are expecting downside to $24,600, with smaller liquidations extending toward $23,000.
• The price range between $25,000 and $25,500 has the most leveraged orders in high volumes.
• A drop below $23,000 would target the $21,451 and $19,549 levels from 2022.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
