adoption rate
If more and more people want a particular product, and the same number of units are in circulation, then obviously the price will go up. Supply and demand govern all markets in the world.

If the cold destroys the tomato crop within one year, and there are fewer edible tomatoes than expected, it makes sense to raise the market price of tomatoes, given the same demand. However, imagine for a moment that people are suddenly buying a lot more tomatoes than in previous years. The demand is increasing and the availability of tomatoes is decreasing, so the price will rise much more than in the previous case.

Demand can grow due to two factors: that the participants are stable and the number of orders is increasing, or that the number of orders is stable, but the number of participants is increasing. Even a combination of the two is possible.

In the following example, we just assumed that the number of participants increases for the same number of products. So, on the one hand, we have Satoshi Nakamoto who decided that Bitcoin (BTC) should become increasingly scarce over time, and on the other hand, there is a potential increase in the price of Bitcoin due to the gradual entry of new people into the market.

Therefore, it is a question of studying the degree of adoption of cryptocurrencies in global markets in order to understand where the value of bitcoins is moving and, in general, where cryptocurrency capital may go in the future.

The growth in the number of wallets is not entirely exponential, but close to it. To predict future growth, you should use the “force law” function, which can better estimate the curvature. To do this, we first plot the graph on a logarithmic scale and then calculate the function that best approximates it.

While this feature does not take into account the possible future increase based on the increase in interest that could appear in 2021 after the unexpected rise in bitcoin, this exercise is used to estimate the growth in the number of wallets over time.

To estimate the rise in the value of bitcoins using the number of wallets in circulation, we need to estimate the average amount in each wallet using a fairly simple function:

Bitcoin capitalization/number of wallets

We now have an estimate of the average bitcoin value per wallet. However, the data suggests something completely different: 70% of wallets hold 0.01 BTC or less, 2% of wallets own more than 95% of the bitcoins in circulation, and exchanges own about 7%.

These reports help us understand the huge potential of Bitcoin in the future, as it is clear that those who own the majority are not selling it because they know Bitcoin and its potential very well. Those with 0.01 BTC or less tend to buy more, and of course, there are always new wallets opening every month.

However, taking the average, we can note the average value, expressed in US dollars, of the contents of these wallets:

Since the average of these deposits is based on the value of bitcoins, to get a best estimate of the “range” of prices that bitcoin can enter, the red dotted line represents the 10th percentile for US dollar-denominated wallets; The blue dashed line represents the 90th percentile. This “area” allows us to determine the value of Bitcoin’s capitalization over time, based on the perceived degree of Bitcoin adoption.

This assessment does not take into account several factors that could make him overly cautious. For institutional investors entering the market, the average amount per portfolio can be much higher than the blue bar shown in the example.