Bitwise "Bitcoin (BTC), Fair Value $197,000"

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An analysis suggests that the fair value of Bitcoin (BTC), calculated based on global money supply, could reach $197,000. While stocks and gold are trading above their liquidity values, Bitcoin is currently trading at about half of its model-based fair value, indicating enormous potential for an upward surge.

Benzinga reported on September 29 (local time) that André Dragosch, Head of European Research at Bitwise, a US virtual asset management firm, stated this in an interview with Bitcoin Magazine. Dragosch pointed out that when applying Bitwise's global money supply model, the equilibrium value of Bitcoin is around $197,000. This is more than double the current market price. Fiscal policy has already shifted to a favorable environment supporting the cryptocurrency market, but the last piece of the puzzle, a shift in monetary policy, is needed to complete a sustainable bull market, he explained.

Tensions in the bond and stock markets were identified as the trigger for a policy shift by monetary authorities. Dragosch presented the firm's research results, which show that if the US 10-year Treasury yield surges by approximately 80 basis points (1bp = 0.01 percentage point) over 20 trading days, the probability of the S&P 500 index experiencing a sharp correction significantly increases. With Treasury yields having jumped by about 50 basis points in the past 20 trading days, putting pressure on mortgage rates and the real estate market, an analysis suggests that the Federal Reserve (Fed) would have no choice but to halt tightening or pivot if a stock market shock materializes.

A clear divergence in prices among actual asset markets is also being observed. Dragosch diagnosed that while the S&P 500 index and gold prices are trading at a premium exceeding their intrinsic liquidity values, Bitcoin remains significantly below the fair value indicated by the liquidity model. He pointed out that while other risk assets and safe-haven assets have already priced in liquidity, Bitcoin alone is abnormally undervalued.

Although the high-interest rate stance of the Fed and other major central banks is tightening financial conditions and directly clashing with the market, it is observed that a bond market "flicker" (or "seizure") could trigger monetary easing. If a phase of renewed supply in the macroeconomic liquidity environment opens up, the undervalued Bitcoin could enter a period of rapid price revaluation, according to the assessment.

A disparity of over $100,000 has formed between the fair value derived from the global liquidity model and the current market price. Market attention is focused on whether Bitcoin can narrow the gap with its fair value of $197,000 and embark on an explosive gap-filling rally amid the financial tensions caused by soaring bond yields.

[Article Key Summary]

-Bitwise analyzed that the fair value of Bitcoin (BTC) is $197,000 according to its global money supply model.

-André Dragosch pointed out that while stocks and gold are trading above their liquidity value, Bitcoin is severely undervalued.

-A stock market correction triggered by a sharp rise in US Treasury yields was identified as a variable that could lead to a Fed policy shift and spark a Bitcoin rally.

*Disclaimer: This article is for investment reference only, and we are not responsible for investment losses based on it. The content should be interpreted for informational purposes only.*