In February one of the oldest financial institutions in the US, the Bank of New York Mellon, announced the introduction of a custody service for Bitcoin and other cryptocurrencies. The institution claimed that BTC had become a widely accepted asset and decided to innovate.
Now, BNY Mellon has published a review on Bitcoin that compares the properties of gold with the cryptocurrency to provide tools for determining its value. BNY Mellon’s analysts recognize the unique properties of BTC and how difficult it can be to calculate its value when using metrics applied to national currencies. The analysts claimed:
It should be seen as part of the assessment mosaic. In early May 2020, a single bitcoin was worth around $ 8,8001, and the total market value of all bitcoin was $ 160 billion2, which is 0.4% of total global currencies. If Bitcoin replaced 5% of world currency at current rates, it would add up to over 100,000 USD / Bitcoin.
When comparing the Bitcoin and gold valuation, the analysts at BNY Mellon referred to the stock-to-flow model created by Plan B (S2F and S2FX). While they recognized that this model had flaws, they also described it as “elegant” with a “much more” established gold market framework “. The analysts added:
The implication of this model is that the scarcity value (measured by S2F) and the subsequent halving will ultimately drive prices to the gold point cluster and total implied market value as Bitcoin gains more mainstream momentum and is viewed more as gold
However, the report claims the evaluation is “more art than science” and therefore emphasizes that all models must reach the “fair” price of Bitcoin, which will be an “ever-evolving” job.
The short and long term price of Bitcoin
Bitcoin is trading at $ 54,420 at the time of writing, taking this important support zone back. BTC is moving sideways on the 24-hour chart, but is still on the uptrend on the 30-day chart, up 17.8%. In the past few weeks, the price development of Bitcoin has been determined by major investors.
Bitcoin with losses on the 24-hour chart. Source: BTCUSD Tradingview As analyst Lex Moskovski points out, the number of Bitcoin whales has dropped to the trendline at around 1,000 BTC after peaking on February 21 when a massive sell-off began. Moskovski stated:
However, the price has increased since the landfill began. This is bullish and also benefits decentralization. Textbook Consolidation.
The co-founders of the research company Glassnode, Yan Allemann and Jan Happel found that the short-term performance of the cryptocurrency will correlate with the level of spending for private investors. The price of BTC could rise if some of the recipients of the Biden-approved stimulus package decide to invest in the cryptocurrency.
Many households now have an additional income buffer to spend due to new economic reviews and lower spending during lockdowns.
Will they invest this in markets or pay off debts? # Bitcoin’s performance in April will depend on it. https://t.co/UJdLxnfqva pic.twitter.com/xXbEICPjqM
– Jan & Yann (@Negentropic_), March 28, 2021
In the long run, the Bitcoin supply shock will play an important role as crypto exchanges continue to see high BTC outflows. This offer is becoming illiquid, as analyst William Clemente noted. Predicting a spike in BTC price for Q3 through Q4 this year, Clemente said:
The rise in negative yielding bonds will leave fixed income investors desperate for yield. Since everything is manipulated in the fiat world, all roads lead to the free and open Bitcoin market.