Bitwise Head of European Research André Dragosch estimates Bitcoin's fair value at $197,000 using trends in the global money supply. During a Bitcoin Magazine podcast appearance, Dragosch identified three possible drivers of another major Bitcoin rally: an AI bubble collapse, dollar weakness and improving global liquidity.
Dragosch said the gap between Bitcoin and global money supply has reached a record, despite a historically strong relationship over the long term. Dragosch's liquidity-based valuation model indicates considerable potential gains if Bitcoin catches up with the expansion in global money supply. Dragosch also said Bitcoin's longer-term trend correlation with the S&P 500 has dropped to the lowest level since 2015. Dragosch believes investors moving capital from gold and AI-related equities into Bitcoin could narrow the valuation gap. Dragosch said recent inflows into Bitcoin ETFs alongside outflows from semiconductor ETFs suggest investor preferences may be starting to shift.
Dragosch warned that tighter financial conditions could cause the AI investment bubble to collapse and set off a wider market correction. Dragosch said annual AI revenue must grow from $200 billion to between $2.5 trillion and $3.5 trillion by 2030 to justify current investment levels. A slowdown in AI spending, weak growth in China and concerns about Europe's debt could increase recession risks in 2027. Dragosch expects central bank easing and dollar weakness eventually to support a Bitcoin rally, despite possible short-term volatility. However, Dragosch warned that dollar strength and tighter financial conditions could postpone Bitcoin's recovery.
Dragosch said Bitcoin could compete with gold and government bonds as a global reserve asset and potentially achieve a market capitalization of $10 trillion. Dragosch expects larger sovereign wealth fund allocations and growing institutional adoption to support annualized Bitcoin returns of 30%-40% over the next decade. Bitcoin-backed credit products, including products offered by Strategy, could become more widely used as traditional finance adopts digital assets.