Pantera's Bitcoin valuation model shows that Bitcoin's ultimate price is expected to reach $700,000.

The cryptocurrency investment firm Pantera Capital released its Bitcoin valuation model in mid-April. Pantera noted that its model compares the number of Bitcoin users with the price of Bitcoin and suggests that the ultimate price of Bitcoin could potentially approach $700,000.

Pantera Capital Bitcoin Valuation Model

Pantera Capital found a remarkable correlation between Bitcoin price and the number of Bitcoin users over the past few years. According to the data model released by PanteraCapital, for every additional 1 million Bitcoin users, the Bitcoin price increases by $200 accordingly. Pantera Capital stated that except for February 2016 when the price did not keep up with the user growth, the model has been effective almost every time.

If this correlation holds true, Pantera Capital predicts that by 2022, the price of Bitcoin will skyrocket by nearly 1200% from its current price of $54,000 to reach $200,000. Pantera Capital explained in the letter that the driving force behind the price surge comes from simple supply and demand dynamics.

Typically, the main factors affecting Bitcoin supply are the "Bitcoin halving events" that occur every four years, while Bitcoin demand fluctuates with new market participants entering the scene. Large companies like Morgan Stanley, PayPal, VISA, and publicly traded companies announcing Bitcoin-related businesses this year have all contributed to the market demand for Bitcoin.

"We have seen two massive shifts, one in demand and one in supply, and both curves are moving upwards."

Bitcoin's Ultimate Value

Based on the above theory, Pantera Capital sets "3.5 billion people" as the ultimate number of Bitcoin users (as there are approximately 3.5 billion people worldwide with smartphones, which is the minimum threshold for owning Bitcoin). In the long term, when all 3.5 billion people adopt Bitcoin, the ultimate price of Bitcoin will rise to $700,000, with a market capitalization of $15 trillion, accounting for 15% of global M2 (broad money supply).

Pantera's Accurate Prediction Last Year

Although Pantera Capital's predictions may seem simple and overly optimistic, the company accurately predicted the price of Bitcoin last year, earning the admiration of many investors for its optimistic valuation model. The founder of Pantera Capital wrote this month that a year ago, the company's valuation report accurately predicted the price of Bitcoin.

"A year ago, we predicted that Bitcoin would reach $62,968 this week, and it did. The surge in Bitcoin is like the last halving. And it may reach $115,000 in August."