Fidelity Investments Analyst Explains Why Bitcoin Adoption Is Slowing

Jurien Timmer, Global Macro Director at Fidelity Investments, explains the recent slowdown in Bitcoin adoption.

While acknowledging Bitcoin as “exponential gold” and a potential store of value, Timmer draws a distinction between Bitcoin’s slowing network growth and its price volatility.

Network growth vs. price increases

Timmer emphasized that Bitcoin's price is primarily determined by network growth and is influenced by scarcity, monetary and fiscal policies, and market sentiment. Despite Bitcoin's price rise , network growth has slowed. These dynamics have created differences that may explain the recent slowdown in adoption.

In his tweet, Timer explained how the growth curves of Bitcoin and Ethereum reflect historical technological developments. He noted that Bitcoin's network, represented by the number of non-zero addresses, follows a power curve, around which the price fluctuates. He also added that this cycle of boom and bust is unique to Bitcoin.

Read more: How to Buy Bitcoin (BTC) and Everything You Need to Know

“I think this difference between price and adoption may explain why Bitcoin has slowed slightly on its way to new all-time highs. The pendulum will only swing so far. The network may need to pick up speed again to continue hitting new highs. Could this be driven by the next chapter of the theory of fiscal dominance (i.e. monetary dependence)?” Timmer wrote :

Veteran trader Peter Brandt responded to Timmer's insight by showing that the gains diminish in each bull market cycle. Brandt said that if this pattern continues, the current uptrend may be nearing its end.

“This makes sense given the asymptotic nature of the power curve and the path of price discovery towards mature assets,” Timmer responded to Brandt’s view.

Why Bitcoin’s slow circulation is not a bad thing

Joo Ki-young, founder and CEO of on-chain analysis platform CryptoQuant, also presented insights. Representative Joo pointed out that Bitcoin's circulation velocity has reached its lowest point since 2013. However, it was expected that once Bitcoinbecomes widely used as a payment method, its circulation speed will peak.

He argued that Bitcoin was initially intended as 'peer-to-peer electronic cash', but evolved into 'digital gold' as institutions held it without trading it frequently. This change in usage means that traditional Bitcoin adoption metrics may no longer be relevant.

“With the emergence of custody wallets such as ETFs, funds are being concentrated in a small number of wallets. To accurately assess the adoption curve, it may be more effective to separate payment cohorts of Bitcoin transactions or use op_codes to measure application usage,” points out Ju.

Read more: How to Invest in Bitcoin?

Representative Zhu's views are consistent with a broader trend of institutional interest in Bitcoin investments . For example, Canadian fintech company DeFi Technologies recently announced that it had adopted Bitcoin as its treasury reserve and made an initial purchase of 110 BTC.

Likewise, Japanese investment firm Metaplanet has adopted Bitcoin as a “core Treasury reserve asset” since April. On June 11, the company announced that it had purchased an additional 23.35 BTC on its balance sheet, bringing its Bitcoin holdings to 141.07 BTC.

In fact, insights from experts and current trends from institutional investors have clearly demonstrated the disconnect between Bitcoin price and network growth. Nevertheless, changes in Bitcoin's usage and increased institutional interest show that Bitcoin's history is not over yet.