Connect with us

Bitcoin

S2F creator has ‘no doubt’ Bitcoin will hit $100K by December 2021

Published

on


PlanB, the creator of the stock-to-flow (S2F) model, reiterated on Nov. 8 that Bitcoin (BTC) is well on its way to hit $100,000. The pseudonymous analyst expects the dominant cryptocurrency to achieve the $100,000 to $288,000 range by December 2021.

Bitcoin would have to increase by around 545% from the current price to surpass $100,000. At that price point, the market capitalization of BTC would near $2 trillion, or roughly the same as Apple, the world’s most valuable company. 

Bitcoin S2F model. Source: PlanB

Why $100,000+ and why is it 2021?

The S2F model attempts to predict the long-term price trend of Bitcoin by evaluating its supply. Namely, it takes into consideration its fixed supply and the block reward halving, which reduces the rate at which new BTC is produced or “mined.”

The theory behind S2F is that as the supply of Bitcoin decreases over time and inflation would continuously rise. These two factors could theoretically amplify the uptrend of the top cryptocurrency.

Based on Bitcoin’s supply curve and the halving cycles, S2F puts the expected valuation of BTC at $5.5 trillion. The model predicts Bitcoin to reach a multi-trillion-dollar valuation before 2024. The model reads:

“S2FX model estimates a market value of the next BTC phase/cluster (BTC S2F will be 56 in 2020–2024) of $5.5T. This translates into a BTC price (given 19M BTC in 2020–2024) of $288K.”

In a tweet, PlanB said he remains confident the S2F model’s $100,000 price projection for Bitcoin would materialize.

2021 is particularly important for Bitcoin because it follows a highly anticipated block reward halving in May 2020.

Six months ago, Bitcoin experienced its third halving in history. This decreased the number of BTC mined each day by half, which would cause the circulating supply to drop over time. The analyst wrote:

“People ask if I still believe in my model. To be clear: I have no doubt whatsoever that #bitcoin S2FX is correct and #bitcoin will tap $100K-288K before Dec2021. In fact I have new data that confirms the supply shortage is real. IMO 2021 will be spectacular. Not financial advice!”

So far, following the halving, Bitcoin has increased from $8,700 to $15,500, recording a 78.1% rally in six months.

BTC/USD daily chart. Source: TradingView.com

The supply of Bitcoin is lower than on paper

On-chain analysts like Woobull.com creator Willy Woo say that the total supply of Bitcoin is lower than often thought.

While the total supply of Bitcoin is 21 million, there is a high number of BTC that is lost or dormant that can no longer be accessed. Woo said:

“Total supply of Bitcoin will not be 21m, it’ll be around 17m as many coins died in the fight for being acknowledged as something valuable in the early days. This means 0.002 BTC per person on the planet.”

As such, PlanB expects Bitcoin to follow the S2F model as the available supply and the amount of new Bitcoin mined decreases over time. 





Source link

Bitcoin

Bitcoin may lose $30K price level if stocks tank, analysts warn

Published

on

By


The ghost of stock market crash is back again to haunt Bitcoin (BTC).

It happened last in March 2020. Back then, the prospect of the fast-spreading coronavirus pandemic led to lockdowns across developed and emerging economies. In turn, global stocks crashed in tandem, and Bitcoin lost half of its value in just two days.

Meanwhile, the U.S .dollar index, or DXY, which represents the greenback’s strength against a basket of top foreign currencies, has now climbed by 8.78% to 102.992, its highest level since January 2017.

The huge inverse correlation showed that investors dumped their stocks and Bitcoin holdings and sought safety in what they thought was a better haven: the greenback. 

More than a year later, Bitcoin and stock markets again wrestle with a similar bearish sentiment, this time led by a renewed demand for the U.S. dollar following the Federal Reserve’s hawkish tone.

Namely, the U.S. central bank announced Wednesday it will start hiking its benchmark interest rates by the end of 2023, a year earlier than planned.

Lower interest rates helped to pull Bitcoin and the U.S. stock market out of their bearish slumber. The benchmark cryptocurrency jumped from $3,858 in March 2020 to almost $65,000 in April 2021 as the Fed pushed lending rates to the 0%-0.25% range.

Meanwhile, the S&P 500 index rose more than 95% to 4,257.16 from its mid-March 2020 peak. Dow Jones and Nasdaq rallied similarly, as shown in the chart below.

Bitcoin, Nasdaq Composite, S&P 500, and Dow Jones rose in sync after March 2020 crash. Source: TradingView.com

And this is what happened after the Federal Reserve’s rate-hike announcement on Wednesday…

Bitcoin and the US stock market plunged after the Fed’s rate hike update. Source: TradingView.com

Meanwhile, the U.S. dollar index jumped to its two-month high, hinting at a renewed appetite for the greenback in global markets.

U.S. dollar index jumped up to 2.06% after rate hike announcement. Source: TradingView.com

Popular on-chain analyst Willy Woo said on Friday that a stock market crash coupled with a rising dollar could increase Bitcoin’s bearish outlook. 

“Some downside risk if stonks tank, a lot of rallying in the DXY (USD strength) which is typical of money moving to safety,” he explained. 

Michael Burry, the head of Scion Asset Management, also sounded the alarm on an imminent Bitcoin and stock market crash, adding that when crypto markets fall from trillions, or when meme stocks fall from billions, the Main Street losses will approach the size of countries.

“The problem with crypto, as in most things, is the leverage,” he tweeted. “If you don’t know how much leverage is in crypto, you don’t know anything about crypto.”

Burry deleted his tweets later.

Some bullish hopes

Away from the price action, Bitcoin’s adoption continues to grow, an upside catalyst that was missing during the March 2020 crash.

On Friday, CNBC reported that Goldman Sachs has started trading Bitcoin Futures with Galaxy Digital, a crypto merchant bank headed by former hedge fund tycoon Mike Novogratz. The financial news service claimed that Goldman’s call to hire Galaxy as its liquidity provider came in response to increasing pressure from its wealthy clients.

Related: Hawkish Fed comments push Bitcoin price and stocks lower again

Damien Vanderwilt, co-president of Galaxy Digital, added that the mainstream adoption would help Bitcoin lower its infamous price volatility, paving the way for institutional players to join the crypto bandwagon. Excerpts from his interview with CNBC:

“Once one bank is out there doing this, the other banks will have [fear of missing out] and they’ll get on-boarded because their clients have been asking for it.”

Earlier, other major financial and banking services, including Morgan Stanley, PayPal, and Bank of New York Mellon, also launched crypto-enabled services for their clients.

Is Bitcoin in a bear market? 

Referring to the question “are we in a bear market?” Woo said that Bitcoin adoption continues to look healthy despite the recent price drop. The analyst cited on-chain indicators to show an increasing user growth and capital injection in the Bitcoin market.

He also noted that the recent Bitcoin sell-off merely transported BTC from weak hands to strong hands. 

7-day moving average of coins moving between strong and weak hands. Source: Willy Woo

Woo reminded:

“My only concern for downside risk is if we get a major correction in equities which will pull BTC price downwards no matter what the on-chain fundamentals may suggest. Noticing USD strength on the DXY, which suggest some investors moving to safety in the USD.”