In a recent update on social media platform X, prominent on-chain analyst Willy Woo shared an intriguing analysis of Bitcoin’s potential future valuations in light of the spot Bitcoin ETFs launched in the U.S. in January 2024.
Woo predicts that the price of Bitcoin could reach as low as $91,000 during bear market lows and as high as $650,000 at the peak of bull markets once ETF investors fully deploy their capital based on asset manager recommendations. Importantly, Woo notes that these price targets are not for the current market cycle but are long-term predictions, emphasizing the slow pace at which capital is usually deployed in such funds.
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.
Finally, Woo compares Bitcoin’s potential growth trajectory with that of gold, noting that gold experienced a 12-year bull run following the approval of its ETFs. He suggests that Bitcoin might follow a similar, if not more amplified, path due to its digital nature and finite supply, potentially exceeding the market capitalization of gold.
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