New data from Pantera Capital, an investment firm and hedge fund, suggests Bitcoin’s current price movement (BTC) is precisely following the price of the stock model, and analysts at the company believe BTC will hit $ 115,212 by Aug. 1.
Bitcoin’s parabolic rally may have put price a little ahead of the model’s forecast, and this week’s 28% correction has temporarily thrown showers across the market, but sharp corrections and brief periods of consolidation are characteristic of bull markets.
The model focuses on the price impact of bitcoin halving events, where the amount of bitcoin minted each block every 4 years is cut in half.
According to the model, the effects of a decrease in Bitcoin supply become apparent around 6 months after each halving. When Bitcoin price halved on May 11, 2020, the price was $ 8,000, and 6 months later BTC was trading above $ 15,000 and was about to enter a parabolic rally to a new all-time high.
The graph above shows the progress of the Bitcoin price in the days after each halving. A similar pattern developed in the last two halves, only with a different time span. Current BTC performance appears to be between the 2016 and 2012 market cycles, which can cause Bitcoin to be between $ 300,000 and $ 400,000 around 450 days after the last halving, or around August 4th.
Signs of a mature market
Another major difference between this rally and 2017 has to do with the overall makeup of the market and the location of the value. Much of the current market’s value is consolidated into Bitcoin and Ether (ETH) as institutional investors have so far selected the most established chains to get involved in the cryptocurrency sector.
Andy Yee, a public policy director for Visa in Greater China, pointed out this development in a tweet response to Pantera’s report:
“This rally is different. According to PanteraCapital, the massive shift from highly speculative, non-functioning tokens in 2017 to #Bitcoin and #Ethereum took place today. “
As shown in the table above, Bitcoin and Ether are 86% of the value. The other 5,000 chains have 14%. While BTC peaked in late 2017, the top two coins totaled 52% of the value, indicating that BTC and ETH have consolidated their market share over the past three years.
Possible reasons for this shift in funds are institutional funds that are focused on Bitcoin as an entry point into the cryptocurrency market due to their network security and huge mining infrastructure, as well as the burgeoning decentralized financial ecosystem, which is largely based on the Ethereum network.
As the DeFi ecosystem continues to grow, it will also attract institutional attention and further increase the price of Ether as it is required to interact with all smart contracts and DeFi platforms on the Ethereum network.
Data from defipulse shows the total value locked in DeFi is now at $ 29.98 billion, near its all-time high of $ 23.116 billion.
As the TVL increases, so does the value of major ecosystem coins, including AAVE and Synthetix (SNX). The trading volume on the most important decentralized exchanges such as Uniswap and SushiSwap continues to grow. Data from Dune Analytics shows that the combined weekly DEX volume recently exceeded $ 13 billion.
The institutional influx of bitcoin can trigger a new altcoin season
While Bitcoin and Ether currently hold 86% of the market value for cryptocurrencies, past market cycles point to a possible flow of funds from the top cryptocurrencies into promising new projects. This dynamic has led analysts like Raoul Pal to conclude that after the outstanding rally in Bitcoin and Ether, the “next stop will be alts with higher risk”.
The media have also reported that Goldman Sachs is reportedly preparing to offer cryptocurrency custody services that could set the stage for the next bitcoin hype cycle. A sustained inflow of money from the institutional class could be the catalyst raising the price of Bitcoin and keeping it in line with the projections of the stock-to-flow model.
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