The crypto market has been ignited in the past weeks, as Bitcoin and Ether gained over 10% and XRP doubled in value.
One reason for the frenzy is the direct listing of Coinbase on Nasdaq on Wednesday. The listing of Coinbase, the first cryptocurrency exchange doing so, is considered a milestone for cryptocurrency on the road to going mainstream. Coinbase is the largest cryptocurrency exchange in the U.S and it now has over 56 million users.
The reference price of Coinbase was $250 a piece and up to 114,850,769 shares are eligible for sale. After opening at $381, the stock soon touched a high of $410. Coinbase ended the day at $328.28, recording a 31% increase from its reference price. At its peak, the company’s valuation topped $107 billion. It is expected that the direct listing of Coinbase could drive crypto acceptance and mainstream utilization, adding fuel to crypto’s recent breakout.
Although Bitcoin and major altcoins faced the biggest sell-offs since March on Sunday, Bitcoin and Ether soon recovered 5% of their price on Monday. The sell-off seemed to be caused by rumors of US regulators planning to charge financial institutions with crypto-related money laundering and China’s power outage causing a hash rate crash.
Now, together with Robinhood, Coinbase is the world’s most famous iPhone app, showing signs of crypto euphoria among new investors.
The famous model predicts Bitcoin breakout at $100,000
The market is having wild guesses for bitcoin’s new high. In a Bloomberg report “Crypto Outlook“, analysts set a goal of $400,000 by the end of Q4 2021 for bitcoin. According to the report, Bitcoin is “on similar ground as the roughly 55x gain in 2013 and 15x in 2017. To reach price extremes akin to those years in 2021, the crypto would approach $400,000, based on the regression since the 2011 high.”
Compared with Bloomberg’s analysis, the target presented in the Stock to Flow model seems more realistic and reachable. The Stock to Flow model measures the scarcity of resources and their prices.
Using the stock-to-flow pricing model created by PlanB, Dan Morehead of Pantera Capital said that “[In 2020] The reduction in supply is only 40% as great as in 2016 … If this relationship holds, that would imply about 40% as much price impulse—bitcoin would peak at $115,212”
A year ago, Pantera published their Halving Stock-To-Flow Projection, which predicted Bitcoin hitting $62,968 in April 2021. The prediction proves to be spot on.
Bitcoin is the fastest asset to reach $1 trillion – in just 12 years, while it took Apple Inc. and Google 42 and 21 years respectively.
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