Is $100,000 Bitcoin Possible? Analyst Breaks Down Major Catalysts
17 Octubre 2024 - 11:00AM
NEWSBTC
As Bitcoin (BTC) edges closer to the $70,000 mark, the crypto
community is abuzz with predictions of a potential surge to
$100,000, accompanied by a significant altcoin season. Amidst this
fervor, crypto analyst Axel Bitblaze has provided an analysis on X,
examining whether the necessary liquidity and catalysts are in
place to propel Bitcoin to such heights. Bitblaze emphasizes the
fundamental role of liquidity in the crypto market. Drawing
parallels to previous bull runs, he notes, “Our space is fully
driven by just one thing, i.e., Liquidity.” He references the 2016
and 2020 bull markets, both of which were significantly fueled by
increasing liquidity. This time, the question is whether similar or
greater liquidity events are on the horizon to drive Bitcoin’s
price higher. #1 Bitcoin Surge Set To Be Fueled By Stablecoins A
cornerstone of Bitblaze’s analysis is the current state of the
stablecoins market. He describes stablecoins as “the gateway to the
crypto industry,” underscoring their indispensability to the crypto
ecosystem. The total market capitalization of stablecoins has
surged to $173 billion, reaching its highest level since the
collapse of TerraUSD (UST). Related Reading: Bitcoin Sees Massive
Surge In Active Addresses: Here’s What It Signals For Price Tether
(USDT) remains the dominant player, comprising 69% of the total
stablecoin market cap with $120 billion. Bitblaze highlights the
historical correlation between BTC prices and USDT’s market
capitalization, stating, “Between March 2020 to November 2021, USDT
MCap rose by 17x while BTC price pumped by 16.5x.” However, since
March 2024, despite USDT’s market cap continuing to rise, Bitcoin’s
price has remained relatively stagnant. “This indicates there’s a
lot of liquidity waiting on the sidelines to enter BTC and crypto.
I guess they’ll start deploying soon, right?” the analyst states.
#2 FASB Rule Change Another significant factor is the impending
change in accounting standards by the Financial Accounting
Standards Board (FASB). Currently, publicly listed companies face
challenges in holding Bitcoin due to unfavorable accounting
treatments. Bitblaze explains, “Let’s say a company bought 100 BTC
at $67,000 each. If BTC drops to $60,000 and then pumps to $68,000,
the company still needs to report it at $60,000… they will have to
show it as a loss even though it’s in profit.” This results in
misleading earnings reports and adversely affects share prices,
discouraging companies from investing in Bitcoin despite its
potential as an asset. The upcoming FASB rule change, set to be
implemented in December 2024, is poised to address this issue.
Under the new guidelines, companies will be able to report the fair
value of their Bitcoin holdings based on market prices at the end
of the reporting period. Bitblaze suggests that this regulatory
shift could incentivize more corporations to adopt Bitcoin as part
of their balance sheets. Related Reading: Bitcoin Analyst Reveals
Best On-Chain Metric For ‘Day-To-Day Trading’ He cites
MicroStrategy as a precedent, noting that since August 2020, the
company has accumulated 252,220 BTC worth $17.4 billion, currently
realizing a profit of $7.4 billion. With S&P 500 companies
collectively holding approximately $2.5 trillion in cash and cash
equivalents—assets vulnerable to inflation—Bitcoin presents itself
as an attractive, inflation-resistant alternative. #3 Expanding M2
Money Supply Bitblaze also delves into the macroeconomic landscape,
particularly the M2 money supply, which includes cash, checking
deposits, and other easily convertible near money. Currently, the
M2 money supply stands at $94 trillion, nearly 39 times the total
crypto market capitalization. Bitblaze references an analysis
indicating that “for every 10% increase in M2 money supply, BTC
pumps 90%.” Despite the M2 money supply being approximately 3%
higher than its previous peak, Bitcoin has yet to surpass its 2021
highs, suggesting that ample liquidity remains untapped.
“Currently, M2 money supply is almost 3% higher than its last peak,
while BTC is still below its 2021 high. With Global rate cuts
happening along with QE, fiat will become a worse investment. As
Ray Dalio said, #Cash is Trash,# and now this gigantic money supply
will find a way into different asset classes, including crypto; the
analyst claims. #4 Shift From Money Market Funds To Bitcoin Since
November 2021, money market funds have grown to $6.5 trillion as
investors sought the safety of Treasury bills amid rising interest
rates. However, with the Federal Reserve initiating rate cuts and
signaling more to come, the yields on T-bills are expected to
diminish, likely causing a significant outflow from money market
funds. Bitblaze predicts, “This’ll cause a massive outflow from
money market funds as the T-bills yield will diminish,” suggesting
that investors will seek higher returns in riskier assets such as
Bitcoin and other cryptocurrencies. He refers to these digital
assets as “the fastest horses” in a QE environment, forecasting
that this shift could channel substantial capital into the crypto
markets. To quantify the potential inflow, Bitblaze aggregates the
available liquidity sources: the M2 money supply of $94 trillion,
money market funds totaling $6.5 trillion, cash holdings of S&P
500 companies amounting to $2.5 trillion, and the stablecoins
market cap of $173 billion. This brings the total to approximately
$103.17 trillion, which is 43 times the current total crypto market
capitalization. He further addresses skeptics, concluded: “For a
$200 Billion inflow, only 0.19% of this account needed to enter
crypto. For those who think this isn’t possible and 200B is too
much, BTC ETFs had over $20B in net inflows despite sideways price
action, no rate cuts, and no QE.” At press time, BTC traded at
$66,944. Featured image created with DALL.E, chart from
TradingView.com
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