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FSInsight calls Bitcoin a “powder keg,” claiming that a single spark may increase its value by 5X

According to a number of key measures, the outlook analysis predicts high prices for the two largest cryptocurrencies by market cap by the end of 2022.

According to a recent analysis from financial research firm FSInsight, Bitcoin might reach $222,000 by the end of 2022 and Ether could reach $12,000 at same time.

For BTC and ETH, that would entail a nearly five-fold and four-fold gain in their respective prices at today’s pricing.

Many variables are anticipated to combine to push prices to those levels by the end of this year, according to a paper on Digital Assets in a Post-Cycle World (DAPTW). According to the research, “overly exuberant valuations” have not been obtained for BTC. An improved efficiency in the market or a shift from payment to store-of-value could explain this.

The lack of bubble-like values is demonstrated by the fact that the BTC market cap peaked at an increase of just 3.7x since the May 2020 Bitcoin halving Since the halving in 2016, the market cap has increased by 4.2x. This is the lowest gain since then.

When the mining reward per block is halved, the amount of new supply that can enter the market is decreased by half. Block rewards were halved in 2020, dropping to 6.25 BTC per block.

FSInsight also considers supply-side dynamics to be a bullish signal. Illiquid BTC (Bitcoin that has been held for a long time) accounts for around 75% of the total supply. According to the data,

“A powder keg best describes the current supply dynamics. The question of who starts the fire remains unanswered.”
According to the Feb. 7 video on the InvestAnswers YouTube channel, this observation is consistent. Bitcoin might rise three times in the next two weeks, according to host James Mullarney, because there aren’t many sellers.

According to FSInsight’s report, the market value to realised value (MVRV) of BTC is at its lowest level since April 2020, when the price was still under $10,000. The BTC price rose steadily over the next year, reaching a high of $57,000 in May 2021, a year after that moment.

By the end of 2022, the research predicts that the price of BTC would vary from $138,000 to $222,000.

The rationale behind ETH’s inclusion

ETH’s uptrend was kicked off by a projection that the currency will generate fees of over $10 billion by 2021. This represents an annual growth rate from 2020 of 1.564 percent, according to the research.

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Even if EIP 1559’s “disinflationary pressure” is a result of ETH’s supply-side dynamics, analysts still see this as an optimistic indicator.

Even if we don’t think this will make ETH “sound” money, it will undoubtedly help the price.
According to network data, bulls may be stymied as long as the Ethereum price remains above $3,000.

In their opinion, ETH is “remarkably undervalued,” according to the experts of FSInsight. By the end of 2022, analysts expect the price of Ethereum will rise to $12,000 as a result of The Merge, Ethereum’s move to Proof-of-Stake consensus, the development of the Layer 2 platform, and the possible launch ETFs.

 

Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.

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