The Bitcoin commentator and fund manager reveals why 2023 is the start of a “new regime” for BTC price action and institutional involvement.


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is at the start of a “new regime” after the price rise in early 2023, and next year will prove decisive.

That’s according to Charles Edwards, founder of quantitative Bitcoin and digital asset fund Capriole Investments.

As investment behavior around Bitcoin recovers in line with the fundamentals of the network and price action, Edwards, perhaps like many other institutional professionals, is preparing for a period of explosive growth.

The jury is still out on whether the bottom is in for BTC’s price, but for long-term investors, time is ticking, he argues.

In an extensive interview with Cointelegraph, Edwards reflects on the outlook for Bitcoin and the crypto industry in the coming years and whether the 2023 rebound has legs.

Looking ahead, next year’s block support halving will be particularly important as Bitcoin becomes, in his words, arguably the “hardest resource in the world.”

Cointelegraph (CT): Bitcoin’s NVT calculation is now at two-year highs. You said it “shows signs of value normalization and the beginning of a new market regime.” What is N/A and why is it a big deal?

Charles Edwards (CE): N/A is often referred to as the Bitcoin version of a “PE ratio” – a simple measure of relative value of the network. N/A is network value to transaction value. It is the ratio of Bitcoin’s market value in US dollars to the 90-day average transaction volume in US dollars flowing through Bitcoin transactions on the chain.

The rationale is simple. If Bitcoin’s network is used to settle a lot of transaction value, the network should be worth more. So, when NVA is relatively low, it means that the market is undervaluing Bitcoin relative to the value of securely settled transactions.

One way to identify the relative value of N/A is to use Dynamic Range N/A; this applies to two-year Bollinger Bands for the N/A ratio. When N/A hits the lower band, Bitcoin has historically been very cheap (a better value buy); when it hit the top group, it was relatively expensive (a time to manage risk).

Bitcoin spent most of the second half of 2022 in the $16-20,000 region, during which it traded in the lower N/A band – a signal of great long-term value. As of February 2023, N/A has broken out above fair value. This could be a sign that we are in a new regime, the early stages of a new bull market. But at the time of writing, N/A is fast approaching the overvaluation band. We’re not there yet, but we can expect some volatility in the near term.

CT: How confident are you that Bitcoin is now in a “new regime” or bull cycle?

CE: There is a very good chance that this is the beginning of a new regime, the early stages of a Bitcoin bull market. We all have signs of a typical turning point of value and feeling. That’s not to say that I expect the price to go up dramatically from here like it did in January; the early stages of Bitcoin bull markets typically involve a 6-12 month period of volatility and a generally slow trend and recovery. My starting point is a positive 2023, with the more significant cyclical growth and returns coming in 2024.

Here are some of the reasons why I see a new regime forming today. From January 2023 we have:

Just exited a period of deep value as defined by many on-chain metrics, including Bitcoin trading at electricity costs for two months ending in January. Historically, this is the global price floor for Bitcoin, and it was the second longest period spent on electricity costs in Bitcoin’s history (the first was 2016).
Completely overshadowed by the price collapse of the third biggest fraud of all time in just two months. Despite the industry’s massive loss of wealth to millions of people, Bitcoin has shown that there are very few marginal sellers left, and the level of deep value is too high to keep prices this cheap for long, regardless of such negative news.
An important technical price confirmation and confirmed forgery at the most important price level on the Bitcoin chart – the old $20,000 all-time high and the point of the FTX crash.
See a short push of 40% with identical characteristics to the 2021 China Mining Ban Bitcoin Price Bottom.
Entering a new regime of upward momentum, confirmed above several long-term moving averages commonly referenced in major markets.
Has an optimal halving cycle timing where Bitcoin usually bottoms out (Q4 2022 and Q1 2023).
The Bitcoin cycle withdrawal reached typical 80% levels at the end of 2022.

Source: CoinTelegraph