On Social Media Platform X, well-known cryptocurrency expert Willy Woo recently posted an engaging assessment regarding Bitcoin‘s prospective worth based on the launch of spot Bitcoin ETFs in the United States, which is scheduled for January 2024.
According to Woo’s analysis, Bitcoin’s price may dip as low as $91,000 during bear markets and soar up to $650,000 during bull market peaks. These figures represent potential future value based on the eventual full investment of capital by ETF investors, following recommendations from their asset managers. However, it is crucial to remember that these price targets do not correspond to the current market trend but rather represent long-term predictions. Capital deployment in such funds typically occurs gradually, underscoring the slow pace at which this process unfolds.
Woo’s predictions are based on several key assumptions and calculations:
- Total Managed Assets: He starts with the premise that globally, asset managers control around $100 trillion in assets. Traditionally, firms like Fidelity recommend allocating about 2% of investment portfolios to Bitcoin, which Woo argues would mean a $2 trillion investment in Bitcoin at current guidance levels.
- Current and Future Bitcoin Investment: Woo estimates that currently, Bitcoin holds about $561 million in investments that can be verified on-chain (visible and verifiable transactions recorded on the blockchain). With the proposed $2 trillion allocation, total investment in Bitcoin could reach $2.56 trillion.
- Market Cap Calculations Using MVRV: MVRV stands for Market Value to Realized Value. It is a ratio used to assess whether Bitcoin is overvalued or undervalued by comparing its current market cap (the total market value of Bitcoin’s circulating supply) to the realized capitalization (an aggregate value of Bitcoin at the prices they were bought). Woo uses typical MVRV ratios seen in previous market conditions—5x during bull market peaks and 0.7x during bear market bottoms—to project future market capitalizations of $12.8 trillion and $1.8 trillion, respectively.
- Self-Custody and Additional Inflows: Woo also hints at additional investment inflows from self-custodied Bitcoin (Bitcoin held and controlled directly by owners, not through intermediaries), suggesting his estimates might be on the lower end.
In the end, Woo points out the possibility of Bitcoin’s growth pattern resembling gold’s, which saw a significant rise during the 12-year bull run after the introduction of gold ETFs. He speculates that Bitcoin could even surpass this growth, given its digital character and limited availability, potentially reaching a market value greater than gold.
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2024-04-15 21:31