Bitcoin May Skyrocket in 2019
According to a study released by Wall Street research and strategy company Fundstrat Global Advisors, the price of Bitcoin could go up to $36,000 towards the end of 2019. In fact, the firm gave a price range increase of $20,000 to as high as $64,000 by the end of next year.
Fundstrat’s Justification of this Prediction
The premise that the strategy firm is working on is that the current hash power growth trajectory (hash power is the computing power required to mine cryptocurrencies – the higher the hash power, the faster your mining ability) supports BTC reaching a price of about $36,000 next year.
This premise is based on certain assumptions. First, the firm says that the ratio between the price of BTC and the break-even cost for miners (the P/BE ratio) has proved to be a reliable support level for long term growth. The mining economy is expected to grow over the next few years and this infrastructure growth will support the price appreciation of Bitcoin. Historically, averages of a 1.8x multiple of the P/BE ratio have shown growth for the cryptocurrency.
Next, the biggest complaint that the energy cost of mining Bitcoin was too high is also going to be addressed. Fundstrat said this was not going to be an issue much longer because new, more energy efficient mining rigs were being launched in the market. This would be in line with the basic premise that hash power infrastructure is growing.
Additionally, mining for Bitcoin is now more concentrated on large scale farming operations. This obviously means even more hash power and mining ability. Individual miners are a thing of the past, and smaller miners now will have to pool their resources to be able to compete with these mega mining farms.
Bullishness on Bitcoin
Fundstrat has been known to be a strong supporter of the cryptocurrency industry, especially Bitcoin and has made multiple predictions about Bitcoin’s price. Earlier this week the firm’s founder and managing partner Tom Lee predicted that Bitcoin’s price will rally this week after the Consensus conference due to be held in Manhattan next week.
While the firm may be a vocal supporter, it also backs up its claims with data and clear analyses. The firm strongly believes – based on multiple analyses – that the cryptocurrency ecosystem will go through sustained long-term growth. In fact, data trends show that younger investors are replacing gold with cryptocurrencies as a store of value.
The firm has predicted that the price of Bitcoin should reach $25,000 by the end of this year.