According to Marion Laboure, a senior analyst at Deutsche Bank Research and author of 'Democratizing Finance', the future trajectory of Bitcoin's (BTC) price is intrinsically linked to collective belief and its perceived value among the public.
Laboure draws a compelling parallel between Bitcoin and diamonds in a recent interview. She highlighted that over the past 50 to 70 years, the valuation of diamonds has surged, not due to inherent utility, but primarily because of the shared belief in their worth and the narrative surrounding the gemstone.
She pointed to the 'Tinkerbell Effect'—a phenomenon where things are thought to exist only because people believe in them—as playing a pivotal role in establishing the valuation of BTC and other cryptocurrencies. This makes it exceptionally difficult to determine the fundamental worth of the flagship cryptocurrency, Laboure contends.
Despite the challenge of valuation, Laboure identifies four core factors responsible for the fluctuating price of BTC over the years. The first, and arguably most important, is perception. Much like diamonds, she believes the price of Bitcoin and other digital assets will appreciate as more people ascribe value to them.
The second factor is the fundamental economic principle of demand and supply. With BTC's finite supply capped at 21 million coins, Laboure predicts its price will continue to soar as demand increases. Currently, with over 90% of BTC's total supply already in circulation, intensifying demand is expected to drive exponential growth.
Another critical element is regulation, which Laboure believes is on the horizon. She suggests that clear guidelines for this nascent asset class could onboard a new wave of institutional and retail users. Regulators and lawmakers have increasingly called for robust regulatory frameworks for the crypto space, particularly in the wake of the high-profile collapses of TerraUSD (UST) and Terra (LUNA).
Finally, she addressed volatility, noting that the crypto market has been notoriously turbulent for years and this pattern is unlikely to dissipate soon. Nevertheless, Laboure is optimistic that favorable regulatory developments will enhance the crypto market's liquidity, thereby helping to mitigate extreme price swings over time.
In her concluding remarks, Laboure emphasized that investor education is also paramount for a thriving crypto economy. She stressed the need for greater public understanding and the ability to differentiate between various crypto projects. Specifically, Laboure noted the importance of distinguishing Bitcoin, the oldest and largest cryptocurrency by market capitalization, from more recent and often speculative entrants.
