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The approval of spot Bitcoin ETFs and spot Ethereum ETFs by the Hong Kong Securities and Futures Commission (SFC) has sparked discussions within the cryptocurrency community about potential price targets and their impact on market capitalization.
Historical Precedence Supports Woo’s Projection
In an X post, Willy Woo, Co-founder of CMCC Crest and an analyst, weighed in on the matter, offering insights into the potential trajectory of Bitcoin’s price in light of ETF adoption in Hong Kong.
According to Woo, the new Bitcoin ETFs could drive price targets of $91,000 at the bear market bottom and $650,000 at the bull market top as soon as ETF investors fully deploy capital, based on asset managers’ recommendations.
Woo, however, cautions that these projections are not specific to the current market cycle, as it takes time for capital deployments to complete. He maintained that Bitcoin will beat gold’s capitalization once asset managers’ capital is fully deployed.
Woo’s projections draw from history as following the approval of spot Bitcoin ETF by the U.S, unprecedented growth was witnessed within a short time frame, eliciting praise from Michael Saylor.
Bitcoin Price Calculations Broken Down
To help the crypto community understand his projections, and give rough insight into the potential impact of ETF adoption on Bitcoin’s price, Woo conducted a back-of-the-envelope calculation.
He started by considering the total capital managed by asset managers, which currently stands at $100 trillion. Based on the typical allocation recommendation of 2% into Bitcoin (as seen with Fidelity), this would translate to a $2 trillion allocation into BTC.
Currently, Bitcoin holds approximately $561,159,959 of investment, which can be measured on-chain. With the addition of ETF capital, the total investment in Bitcoin would reach $2.56 trillion.
The new #Bitcoin ETFs brings price targets of $91k at the bear market bottom and $650k at the bull market top once ETF investors have fully deployed according to asset manager recommendations***.
These are very conservative numbers. #Bitcoin will beat gold cap when ETFs have…
— Willy Woo (@woonomic) April 15, 2024
Woo then uses the Market Value to Realized Value, MVRV ratio to calculate potential market capitalization at different market phases. In bull market tops, the MVRV ratio is typically 5x, while in bear market bottoms, it is around 0.7x.
This results in estimated market capitalizations of $12.8 trillion and $1.8 trillion, respectively, corresponding to price targets of $650,000 and $91,000 per coin.
However, Woo emphasizes that these estimates are representative of a lower bound, as they did not factor in other variables such as self-custody inflows, which are currently substantial.
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
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