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Macro Expert Tom Lee | What's Next For Markets?
Bankless
Understanding Bitcoin: Network Effects and Youthful Innovation
Bitcoin's price movement can be primarily explained through two key factors: network effects and transaction activity per wallet. The exponential benefits derived from an increasing number of wallets align with Metcalfe's law, demonstrating that price rises correlate significantly with user adoption. Analysis from 2017 suggested that a 30% annual increase in wallets could project Bitcoin's price to $25,000 by 2022, highlighting a general skepticism among traditional investors who are typically older and less open to disruptive technologies. Historical parallels with the growth of cell phones illustrate how younger generations recognize the utility of new technologies, while established investors often resist change. This generational dynamic results in a negative bias towards cryptocurrencies, as they challenge the traditional banking system.
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