Re: Using Average BTC holdings (in USD) vs # of Users to Understand USD/BTC
The x-axis shows the number of Bitcoin users and y axis the average (arithmetic mean) value of their bitcoin holdings in dollars. Taken together these allow us to know what the current price is. Of course the distribution of bitcoins held will not be normal, it probably follows some kind of power law. I still think that using the mean can be informative. The heatmap and contours show the USD/BTC ratio for the given possible combinations of users and average holdings. For example, given a price of $600 either there are 2 million users holding a little under $4k worth of bitcoin each, or 1 million users holding on average ~$7.5k worth.
To predict the future price we would need to guess the distribution of how much each would be willing to hold as well as growth/loss of users.
Interesting idea, trying to get what exactly you're doing though... You make no further assumptions rather than that coin holdings are following a normal distribution (probably not the case, but like you said: let's roll with it for now), but is there any empirical input? Is the 'number of users' value based on actual statistics, or does it follow from the assumption above? If the former, where does the data come from, if the latter, how?