If bitcoin (BTC) breaks the $ 10,000 limit, the effect is that more investors will join in a short time. This is what Tom Lee, chief analyst at Fundstrat research firm from New York, expects. Lee is known as a ‘bitcoin bull’, someone who is very positive about the future value of the crypto coin.
The $ 9,000 was tapped for a while in May, but bitcoin has been in a downward trend ever since. The bitcoin (BTC) rate has corrected itself by 9.8% last week. The monthly and 3 month score is still positive with 12.6% and 100%. Analysts still see bitcoin in a ‘bullish’ pattern.
In addition to technical analysis, market sentiment also plays a role in the cryptomarket.
Fundstrat responds to this trend by developing a model where the phases of Fear of Missing Out (FOMO) are arranged. Financial Times journalist Adam Swanson pays attention to this model in a tweet, after which Tom Lee from Fundstrat hooks up.
— Adam Samson (@adamsamson) May 29, 2019
According to Lee, there is currently a “FOMO level 5”. Actually the level before all brakes are released (“FOMO level 10”). In 2017, bitcoin of $ 4,500 ( ‘summer of cryptolove of 2017’, ed. ) Shot through the $ 10,000 limit.
According to the graph below, the $ 10,000 was settled at the end of November. The provisional all-time high of $ 20,089 is reached in just two weeks (December 17, 2017)
Lee would like to draw a parallel with that decisive moment in 2017: a larger group gets the feeling that they are missing the boat, on which the course shows an exponential curve. According to the analyst, the $ 10,000 level is the next goal for bitcoin.
Actually the point of the chart is to say “real FOMO” probably starts when #bitcoin exceeds $10,000 as that is a price level only seen 3% of all days…
…mathematically equivalent to exceeding $BTC $4,500 in 2017
Looking back, that price was a level that indeed triggered FOMO
— Thomas Lee (@fundstrat) May 29, 2019
The following theory also unfolds in a recent podcast between Lee and Bino CFO Wei Zhou. Zhou, a former analyst on Wall Street and started last year at the Malta crypto, marks $ 10,000 a new high.
He foresees a similar acceleration as at the end of 2017: a rapid climb towards $ 20,000. He even sees a goal of $ 40,000 at the end of 2019 as achievable.
According to analyst PlanB, recently cited by Misss Bitcoin in an interview with Bitcoin Magazine NL, the ‘bitcoin halving’ (halving the bitcoin reward for the miners, ed.) is a driver behind the potential value of the crypto currency.
This bitcoin halving takes place in May / June 2020: the ‘reward’ of a miner is halved from 12.5 to 6.25 BTC. There is therefore more scarcity in the market with a halving.
Also with gold, also an asset that is characterized as a ‘store of value’ potting agent, the stock decreases over time. The price is expected to increase with scarcity.
Plan B calculates the inflation of bitcoin by means of the variable ‘Stock-to-flow ratio’. This so-called SF ratio is now at ’25’. This amounts to an inflation rate of 4%.
PlanB sees a “linear relationship” between the SF ratio and the market value of bitcoin (see graph above). As soon as the SF ratio rises to ’50’ with a halving, this amounts to an inflation of 2%. Bitcoin can therefore have a lower inflation rate than fiat money.
The current market value of bitcoin is now $ 137 billion. With increasing scarcity, PlanB expects more capital to flow to the asset. A market cap of $ 1,000 billion is real, equivalent to $ 55,000 per BTC unit.
But who is going to pull the cart? Private investors or institutional investors? PlanB expects ‘FOMO’ to also fall on institutional investors, an argument that was also used by Mark Yusko, CEO of Morgan Creek Capital.
Their trade counters are primarily focused on bitcoin and not on altcoins. With bitcoin we are looking for a ‘hedge’ in relation to more volatile assets.