This model predicts Bitcoin at $ 1,000,000 – Sponsored Bitcoin News

Sponsored

Analysts at Hedgeye Risk Management, an investment research and financial media company based in Stamford, Connecticut, have analyzed the Bitcoin stock-to-flow argument. This framework suggests that the price of Bitcoin could potentially reach $ 1 million in the second half of the 2020s and up to $ 10 million per BTC in the 2030s.

“First they ignore you Then they laugh at you Then they fight you Then you win ” -Mahatma Gandhi

At its most recent peak, Bitcoin’s market cap hit $ 1.2 trillion. To give you some perspective, this is bigger than the four largest banks in the United States combined (JP Morgan, Bank of America, Citi, Wells Fargo) and the four largest payment platforms together (Visa, Mastercard, PayPal, Square).

As most long-term owners know, a clash of critical factors will continue to spread the adoption of crypto around the world.

Among them:

• Companies that accept payments through cryptocurrencies

• Institutions that keep crypto on their balance sheets

• Asset managers creating new investment vehicles (at the time of this writing, there are eight asset managers with Bitcoin ETF applications pending)

• The devaluation of the US dollar

• Growing distrust of centralized political and monetary institutions

The list goes on and on.

Analysts at Hedgeye Risk Management, an investment research and financial media company based in Stamford, Connecticut, have analyzed the Bitcoin stock-to-flow argument – in line with their approach of a. to observe quantitatively Lens (which is noticeably devoid of qualitative, narrative “calls”).

This framework suggests that Bitcoin’s price may be reached $ 1 million in the second half of the 2020s and up to $ 10 million per BTC in the 2030s.

Hedgeye was founded in 2008 by former buy-side analysts to democratize access to hedge fund quality investment research for everyday investors. To expand the scope of its research process, Hedgeye’s Macro team created a comprehensive, daily quantitative dashboard for a range of cryptocurrencies and ETFs, aptly named “Bitcoin trend tracker“.

This “Crypto Quant” dashboard breaks down 1) price, 2) volume, and 3) volatility among several other metrics of each asset it tracks. (You can watch the 30 minute film by Hedgeye Macro analyst Christian Drake Explanatory video for using the tracker Here).

The goal is simple: to provide investors with the same high quality quantitative data for cryptocurrencies as for other asset classes, reflecting the reality that crypto is here to stay. The Bitcoin Trend Tracker is no different from Hedgeye’s other proprietary tools that use market-based signaling to stay one step ahead of major moves on any asset.

In addition, one of Hedgeye’s analysts, Josh Steiner, also has one Fundamental analysis by comparing the stock-to-flow model of Bitcoin with that of other hard assets and comparing the development of the Bitcoin price with this stock-to-flow framework. Below is a summary of this analysis.

To be clear, it should go without saying that there are numerous legitimate risks to being long Bitcoin. Smart investors need to be aware of these risks. They cover the entire spectrum and include potential regulatory risks as well as competition and technological risks. Anyone who owns Bitcoin (or any other cryptocurrency) needs to be aware of these potential landmines and risk them accordingly.

(You can access the slides in this article here)

“The idea here is simple,” explains Steiner.

“If you look at the ratio of the outstanding supply to the flow rate of that supply, you get the ratio of inventory to flow. Bitcoins Stock-to-flow Ratio is currently 54x; On an outstanding basis of around 18.6 million BTC, around 344,000 BTC are mined annually.

But the remarkable thing about Bitcoin is that it has a preprogrammed creation decline roughly every ~ 4 years; During each of these events, the reward for mining Bitcoin is halved.

That means the Stock-to-flow The ratio is expected to increase logarithmically tenfold every 12 years.

To put this into perspective, we should be working on one by 2036 Stock-to-flow Ratio of about 1000x – or more than 10 times the stock-to-flow of Housing (93x) or Gold (72x). By 2048 there will be another tenfold increase that the Stock-to-flow up to 10,000x. “

In plain English, Bitcoin is mathematically designed to be its. increased exponentially Stock-to-flow Ratio until it finally mathematically converges to infinity. This is both relative to the current state and relative to other hard money investments like housing and gold. A higher stock-to-flow ratio indicates that less new supply is coming onto the market compared to the existing pending supply of an asset.

In other words, an asset with a higher stock-to-flow ratio should hold its value better over the long term compared to other assets. In a world of easy money and the devaluation of the US dollar, it is easy to understand the attractiveness of Bitcoin not just as a hard money asset, but as an ultra hard money investment. Unlike real estate and gold, which have high but relatively static stock-to-flow multipliers, Bitcoin’s stock-to-flow ratio will grow exponentially over the next 100+ years.

Steiner revolves around the already mentioned ongoing topic, the effect on the price.

In the following graphic, Steiner draws a time series of the Bitcoin price (y-axis) versus the Stock-to-flow Ratio as it changes over time (x-axis) until 2057. Perhaps most importantly, the black dots on the right graph reflect the historical price of Bitcoin compared to the theoretical progress implied by the stock-to-flow ratio … and has followed the model very closely so far.

With over two decades of investment analysis experience, Steiner used every regression analysis in the book to model the future price of Bitcoin. By far the best fit was a power function. The diagrams shown are logarithmic; Bitcoin’s price increase was – and can continue to be – logarithmic.

“Every 10x increase in bitcoins Stock-to-flow The ratio, which will happen every ~ 12 years in the future, has resulted in a ~ 1,000-fold increase in the price of Bitcoin. And that didn’t happen once, but twice. “

Steiner explains that even after a decade-long career on both the buy and sell side of Wall Street in finance, housing, and macros, he has never seen another asset do this.

In the interests of transparency, Steiner does not keep his model secret. The equation for the theoretical course of the Bitcoin price (relative to its Stock-to-flow) is y = 1.3268x2.4769.

This equation predicts that Bitcoin will hit $ 1 million per BTC in the second half of the 2020s and $ 10 million by the end of the 2030s.

Naturally, Stock-to-flow is not that just Factor that will affect cryptocurrency prices in the future. The aim of the model is to prove how Bitcoin per se could reach these price levels.

In addition, not everyone plans to own cryptocurrencies in the long term. Many people use crypto in various transactions or to store value but make a profit later, among numerous other use cases.

Hedgeye’s goal is to add a quantitative framework for investing in cryptocurrencies for both short-term traders and long-term investors.

Investors can now gain a better understanding of the short- and long-term movements and correlations that are changing the short-term performance of various cryptocurrencies and crypto-related ETFs. In other words, Hedgeye brings transparency to what is believed to be a massive asset class that could one day compete with stocks, fixed income, and forex.

The Bitcoin trend tracker does just that.

As a risk management tool, it focuses on the price, volume, volatility, and correlative properties of each asset it tracks. It is managed by the Hedgeye Macro team and continues to evolve based on new models they develop, subscriber feedback and innovations within crypto.

Hedgeyes Bitcoin trend tracker includes Hedgeye CEO Keith McCullough’s proprietary, low buy, high risk margin for Bitcoin, ether, the Grayscale Bitcoin Trust (AGB) and Micro-strategy (MSTR) … in addition to other critical quantitative crypto risk management data that you cannot get anywhere else.

Recently, Hedgeye expanded its crypto coverage to include proprietary risk areas for the Amplify Transformational Data Sharing ETF (BLOK).

BOTTOM LINE: With the “Bitcoin Trend Tracker” you now have access to critical crypto risk management signals.

Find out more about Hedgeye’s bitcoin trend tracker Here.

Learn more about Hedgeye’s entire investment research process Here.

---

This is a sponsored post. Find out how you can reach our audience here. Read the disclaimer below.

Photo credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer of liability: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or approval of any product, service, or company. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author are directly or indirectly responsible for any damage or loss caused or allegedly caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

source https://bidsfor.me/this-model-predicts-bitcoin-at-1000000-sponsored-bitcoin-news/