Financial research firm FSInsight predicts that Bitcoin ( BTC ) could climb to $222,000 and Ether ( ETH ) to $12,000 by the end of 2022 in a new report.
At current prices for BTC ($43,350) and ETH ($3,080), that would be a fivefold and fourfold increase, respectively.
The report , titled "Digital Assets in A Post-Cycle World," detailed several factors likely to drive prices higher through year-end. Compared to other cycles, BTC has not reached "effervescent value". That could be due to better efficiencies in the market or the shift from a payment solution to a store of value solution.
The lack of bubble-like prices is evidenced by the fact that BTC's market cap has increased by just 3.7x since the Bitcoin halving peaked in May 2020. That's the lowest increase since the 2016 halving, when market cap peaked at a 4.2x increase.
The halving is an event where the mining reward spent per block is reduced by half. This reduces the new supply entering the market. With the 2020 halving, block rewards dropped to 6.25 BTC per block.
FSInsight also sees the momentum on the supply side as a bullish signal . The illiquid stock of BTC, i.e. bitcoins that are held for the long term, accounts for about 75 percent of the supply in circulation. The report states:
"The current supply dynamics can definitely be described as a powder keg. The only question is who will light the match."
This observation aligns with the forecast in a video posted Monday on the InvestAnswers YouTube channel. James Mullarney said that due to the current lack of sellers, a “buy 100,000 to 200,000 bitcoin in a week or two” could see the price triple.
The FSInsight report also states that BTC's Market Value to Realized Value (MVRV) ratio is at its lowest level since April 2020. At that time, the price was still less than 10,000 US dollars. From that point, BTC price climbed steadily over the next year, peaking at around $57,000 in May 2021.
The report predicts that BTC price will eventually reach a range between $138,000 and $222,000 by 2022.
Optimism also at ETH
A bullish forecast was also made for Ethereum in the report. In 2021, ETH has generated nearly $10 billion in fees . According to the report, that represents an annual growth rate of 1,564 percent since 2020.
ETH has recorded an annual growth rate of 1,564 percent in 2021 since 2020. Source: FSInsight
The momentum on the ETH supply side is also showing bullish signals, according to the analysts. They explained that the combustion mechanism from the implemented Ethereum Improvement Proposal 1559 creates “disinflationary pressure”. But they also added:
"While we don't necessarily believe it makes ETH 'hard' money, it's certainly beneficial for the price."
FSInsight analysts conclude that ETH is "strikingly undervalued". Analysts have also factored in the so-called “merge”, i.e. Ethereum’s transition to a proof-of-stake consensus, the development of the Layer 2 platform and the potential introduction of exchange-traded funds in their forecast . Based on these factors, they expect it to rally to $12,000 by the end of 2022.
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