Increasing Outlook: Sentiment & FY 2020 Forecast Support a “Non-Speculative” Bitcoin Price of $16,500
Please see important disclosures at the bottom of this report
Portfolio Strategy
The conditions appear in place for a continued rally in crypto asset prices over the course of the year. Last week brought two events that 1) incrementally de-risked the downside and 2) improved the bull market case.
- We are gaining confidence in the sustainability of this rally with each day that passes after the halvening that we don’t see signs of trouble in the mining sector.
- Investor sentiment data has shown signs of strength that offer encouragement for the prospects of a continued rally.
There are risks that remain, but on balance we are seeing enough positive conditions unfold to give us room to revise our Bitcoin outlook upward to $16,500.
Alongside our updated outlook, we are releasing our initial FY 2020 Bitcoin financial forecasts and fundamental valuation metrics to investors – this is the first of such sell-side forecasts on the market, as far as we know.
Our FY 2020 fundamental forecasts are calling for Bitcoin’s book value per share (cumulative mining revenue per coin) to reach $1,100, which is a $100 increase from our prior expectations. Investors will recall, the Market Cap/Cumulative Miner Revenue (Mkt Cap/CMR) valuation model I developed has been a very reliable predictor of market movements. Our target is applying a 15x Price/Book multiple (Mkt Cap/CMR), which is equal to its 3-year historical average. Based on our analysis, we believe Bitcoin continues to offer a strong fundamental investment opportunity, beyond a “great speculation”.
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