Bitcoin US$650,000 - CHAINLETTER 66

A look at bitcoin valuation through the lens of inverse volatility

I should go away more often. Bitcoin has made good progress this week, ascending at a considerably smoother rate than yours truly on a bicycle in the Alps. The set-up (for bitcoin) looks highly promising for the year end.

A look at the Inverse Volatility of bitcoin and gold suggests to us that in relative terms bitcoin is massively undervalued. With gold at US$3,881/oz, bitcoin should be around US$650,000, a five-fold increase from here. Even if you disagree with the detail, that’s a huge margin of safety. Take a look at the calculations and let us know what you think.

There’s an ongoing and energetic debate about the core bitcoin software, which reaches into the heart of bitcoin’s identity. In Core vs Knots we attempt to shed some light onto a debate which has further to run.

The emergence of Aster and its whirlwind demolition of Hyperledger’s perp trading market share is a case study of the almost complete absence of moats in most parts of the crypto universe. It makes crypto a highly volatile and difficult market to trade -one that probably shouldn’t be tried at home, although it doesn’t stop millions trying.

But then again, it’s only by stepping on a rotten branch that you find out about rotten branches.

Summary

• Technical: bitcoin breaks above key level, BNB shows strength

• Valuation: the fall in bitcoin’s historic volatility relative to gold’s historic volatility suggests it should be US$650,000

• On-Chain: Bitcoin Core vs Bitcoin Knots

• Decentralised Disrupters: Aster’s rise and Hype’s fall, Tradfi embraces crypto

TECHNICAL

Bitcoin Price Action: Breaking Through Key Resistance

Bitcoin moved decisively higher this week, breaking through the $118,000 level that has acted as resistance since mid-summer. The level was lost in August, when BTC slipped out of its established range and retested earlier support zones. A couple of weeks ago, bitcoin attempted to break through this level and was slammed back down to the August lows.

This latest move looks to have succeeded in reclaiming $118,000. Given the length of this consolidation period, allied to the time of year, we believe it will hold this time. The all-time high now sits around 3% away, raising the prospect of a retest.

Bitcoin has now formed a higher low and higher high. You’d expect some heavier traffic in the early 120s, but the set-up looks extremely promising for the autumn.

The timing also coincides with a familiar seasonal pattern. October has historically been one of Bitcoin’s strongest months, often referred to as “Uptober.” Since 2013, BTC has averaged +20.6% gains in October, with positive returns in 11 of the past 13 years. This is far stronger than most other months.

October 2025 appears to be following the same path.

Source: Coinglass

Bitcoin Dominance: BTC-Led Rally

The move higher has been Bitcoin-driven, reflected in a modest uptick in BTC dominance after the sharp fall between June and September.