Fidelity Director of Global Macro Jurrien Timmer compared Apple Inc (NASDAQ:AAPL) and Bitcoin (CRYPTO: BTC) and drew similarities on the trajectory of their growth in value.
Taking A Creative License: Timmer took to Twitter and applied a theory to Apple in making his point.
The analyst said that while in the past he has compared Bitcoin’s growth to historical S-curves — mobile phone subscriptions and internet adoption — a more recent example of this network effect is Apple’s rise to network dominance since the 1990s.
Timmer said he was going to take a bit of a “creative license” and apply Metcalfe’s Law to Apple.
See Also: How To Buy Bitcoin (BTC)
What Does The Law Say? Metcalfe’s Law, first proposed by George Gilder in 1993 and attributed to internet pioneer Robert Metcalfe, says that the value of a telecommunications network is square of the number of connected users in the system.
Timmer said that Apple’s network has risen 53x since 1996, while its market value has risen 1699 times. He said that if Apple increases in market value have been roughly the square of its growth in sales then the expected growth rate for the iPhone maker should be 2855 times for its market value.
If Apple’s increase in market value should have been roughly the square of its growth in sales (53 to the power of 2), then we get an expected growth rate of 2855x for Apple’s market value. At 1699x, it’s in the ballpark. /5 pic.twitter.com/GjY9LkwZDl
— Jurrien Timmer (@TimmerFidelity) February 17, 2022
“At 1699x, it’s in the ballpark,” noted Timmer. The Tim Cook-led company has seen its price grow 1457 times since 1996, while its price-to-sales ratio has grown 30 times.
“If the growth in valuation is an exponent of the growth in sales (per Metcalfe’s Law), then price should increase as an exponent of both metrics. For Apple, it has.”
Apple And Bitcoin: Comparing Bitcoin to Apple, Timer used the apex coin’s price and its price-to-network ratio. Bitcoin’s valuation has risen 867x since 2011, while its price has shot up 640,633x. The square of 867 — following Metcalfe’s law — gives the value of 751,111, which is also in line with how much Bitcoin has risen in price.
Even though Apple and Bitcoin are different animals, according to Timmer, they follow a similar path — one dictacted by their network growth.
Below is a side-by-side comparison of Apple and Bitcoin. Different animals to be sure, but they follow a similar path as dictated by their network growth. /9 pic.twitter.com/N89L39pPb9
— Jurrien Timmer (@TimmerFidelity) February 17, 2022
Timmer noted that Bitcoin’s demand curve is going up and is headed towards the right. He gave out two possible measures based on historical S-curves — mobile phone subscriptions and internet adoptions both of which lead to Bitcoin shooting to unprecedented highs by 2037.
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