The approval of spot Bitcoin ETFs and spot Ethereum ETFs by the Hong Kong Securities and Futures Commission (SFC) has sparked discussions inside the cryptocurrency group about potential price targets and their affect on market capitalization.
Historical Precedence Supports Woo’s Projection
In an X put up, Willy Woo, Co-founder of CMCC Crest and an analyst, weighed in on the matter, providing insights into the potential trajectory of Bitcoin’s price in gentle of ETF adoption in Hong Kong.
According to Woo, the brand new Bitcoin ETFs may drive price targets of $91,000 on the bear market backside and $650,000 on the bull market top as quickly as ETF traders totally deploy capital, primarily based on asset managers’ suggestions.
Woo, nonetheless, cautions that these projections aren’t particular to the present market cycle, because it takes time for capital deployments to full. He maintained that Bitcoin will beat gold’s capitalization as soon as asset managers’ capital is totally deployed.
Woo’s projections draw from historical past as following the approval of spot Bitcoin ETF by the U.S, unprecedented progress was witnessed inside a short while body, eliciting reward from Michael Saylor.
Bitcoin Price Calculations Broken Down
To assist the crypto group perceive his projections, and provides tough perception into the potential affect of ETF adoption on Bitcoin’s price, Woo carried out a back-of-the-envelope calculation.
He began by contemplating the entire capital managed by asset managers, which presently stands at $100 trillion. Based on the standard allocation suggestion of two% into Bitcoin (as seen with Fidelity), this may translate to a $2 trillion allocation into BTC.
Currently, Bitcoin holds roughly $561,159,959 of funding, which will be measured on-chain. With the addition of ETF capital, the entire funding in Bitcoin would attain $2.56 trillion.
The new #Bitcoin ETFs brings price targets of $91k on the bear market backside and $650k on the bull market top as soon as ETF traders have totally deployed in accordance to asset supervisor suggestions***.
These are very conservative numbers. #Bitcoin will beat gold cap when ETFs have…
— Willy Woo (@woonomic) April 15, 2024
Woo then makes use of the Market Value to Realized Value, MVRV ratio to calculate potential market capitalization at completely different market phases. In bull market tops, the MVRV ratio is often 5x, whereas in bear market bottoms, it’s round 0.7x.
This leads to estimated market capitalizations of $12.8 trillion and $1.8 trillion, respectively, corresponding to price targets of $650,000 and $91,000 per coin.
However, Woo emphasizes that these estimates are consultant of a decrease certain, as they didn’t think about different variables corresponding to self-custody inflows, that are presently substantial.
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