Bitcoin (BTC) Could Rise to $112,000 This Year says Ki Young Ju, CEO of analytics firm CryptoQuant.
Even in a worst-case scenario, Bitcoin should rise to at least $55,000, the analyst said.
New Bitcoin ETFs already manage $10 billion
Ki Young Ju’s prediction has everything to do with the recently launched Bitcoin spot exchange-traded funds (ETFs) in the United States.
The historic approval of the first Bitcoin spot ETFs took place on January 10th. Although the price did not initially respond as strongly as hoped, nine new ETFs have already managed more than $10 billion combined.
“The Bitcoin market saw $9.5 billion in monthly ETF inflows, potentially increasing realized market cap by $114 billion per year,” the analyst said.
However, $6.3 billion also flowed from the Grayscale BTC ETF
However, the $9.5 billion inflow last month was also accompanied by a significant outflow from the Grayscale ETF (GBTC). Grayscale’s fund existed before it was converted into an ETF last month.
Many investors decided to pocket their profits by exiting the fund. Some investors decided to switch to one of the competitors because almost all of them have lower costs than Grayscale.
According to Ki Young Ju, Bitcoin price may rise quickly despite Grayscale outflow. Even with GBTC outflows, a $76 billion increase could increase realized capitalization from $451 billion to $527 billion to $565 billion increase.
The increase in MRV pushes Bitcoin to $112,000
For the calculation, the analyst does not look at the regular market capitalization, but rather the realized capitalization. This is a metric that calculates the total value of a cryptocurrency based on the last time a coin was moved or sold, rather than the current market price.
Essentially, it multiplies the price each coin was last traded at by the number of coins that were currently moving and then adds all of these values together.
This can provide a more realistic picture of the economic value that investors place on the coin by taking into account the actual price paid for each coin and not just using the current market price.
Market value to realized value (MRV) is a ratio that shows how the current market price of a cryptocurrency compares to the price that people have paid on average. If the MRV is high, the coin may be overvalued; if low, possibly undervalued.
Accordingly Ki Young Ju, Bitcoin typically bottoms out in the market with an MRV of 0.75 and typically peaks with an MRV of 3.9. If it remains at its current value of 2.07, Bitcoin would reach a price of $55,000 to $59,000. If it rises back to 3.9, Bitcoin will be between $104,000 and $112,000.