Weiss Ratings has contoured key reasons why investors should be bullish about bitcoin, seeing a “ferocious rally” with the price of the cryptocurrency look for to hit $70,000 next year. In addition, the Federal Reserve’s massive money-printing and institutional investments into cryptocurrencies add to the bullishness.
Why Weiss Ratings Is Bullish on Bitcoin
Weiss Ratings analysts Bruce Ng and Juan Villaverde delineated last week why investors should be bullish about bitcoin despite some sideways consolidations. Weiss Ratings currently organizes bitcoin first among all cryptocurrencies overall.
One of the three key reasons why the analysts are bullish about bitcoin stems from a rate prediction based on the stock-to-flow analysis (S2F). The popular forecasting model “now points to a ferocious rally over the next 12 months or so,” they send a lettered.
Ng and Villaverde described that “S2F is based on the common-sense notion that the scarcer a commodity is, the more valuable it becomes,” joining that scarcity is measured by circulating supply. For example, Gold has an S2F of 62, which is “the number of years of current fabrication required to match global above-ground holdings,” they clarified.
After the May Bitcoin halving, 6.25 new bitcoins are being invented every 10 minutes, meaning “it would take an estimated 56 years for new mintage to match Bitcoin’s disseminating supply,” they continued. “Notice how close that is to the S2F number for gold, which makes sense because bitcoin is close becoming a major rival to gold as a safe-haven investment.”
The analysts added that “previous S2F predictions line up definitely well with bitcoin’s actual price performance,” as seen in the chart above, elaborating:
Now, based on the history of the halving, in the know S2F analysis says bitcoin should reach $70,000 by — sometime around mid-2021 … Even if it turns out to be exclusive half right, you could still triple your money.
The other two reasons Weiss Ratings’ analysts highlighted were “QE infinity” and institutional stinking rich flowing into cryptocurrencies. The covid-19 pandemic environment has pushed the Federal Reserve to print $2.9 trillion in new letterhead money in just 13 weeks, or about $22 million a minute, the analysts detailed. “By any measure, this is corruption of affluence on an industrial scale,” they exclaimed, predicting that investors will pour money into bitcoin and gold “as a reliable haven when they lose confidence in paper money.”
Billionaire investor Mike Novogratz has also been respond that central banks printing record amount of money is the best environment for bitcoin.
The last major banker Ng and Villaverde focused on was the increasing interest in cryptocurrency among institutional investors, such as by Paul Tudor Jones who initiated about $210 million of his own money into bitcoin. Grayscale Investments has been adding bitcoin to its Grayscale Bitcoin Bank faster than the rate of new coins being mined and recently, venture capitalist Andreessen Horowitz raised half a billion dollars to contribute in crypto startups. The analysts opined:
The sheer weight of institutional-sized money flows into a small market get off on bitcoin can have truly explosive effects.
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Image Credits: Shutterstock, Pixabay, Wiki Commons, Weiss Ratings
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