Here’s why FSInsight foresees BTC and ETH racing past 200k and 12k, respectively

Here’s why FSInsight foresees BTC and ETH racing past 200k and 12k, respectively

By Sam Grant - min read
  • A report by FSInsight predicts Bitcoin should end the year in the $138k to 222k range
  • The report also indicated that Ethereum could reach $12k as it's remarkably undervalued

Market data outlook firm FSInsight has predicted that Bitcoin could reach $222,000 and Ethereum grow as much as $12,000 in the second half of the year. In a recent report, Digital Assets in A Post-Cycle World, the firm said that a number of factors could work in favour of the coins pushing them to reach the projected price.

Several Bitcoin metrics are bullish

FSInsight explained that Bitcoin is showing better market efficiency and has not exhibited rapid and unsustainable price appreciation as in previous cycles, which could be attributed to its shift from a payment method to a store of value.

Further, the report cited the increased correlation between Bitcoin and tech stocks, noting that the digital asset showed increased co-movement with equities over the last quarter. The head of digital asset strategy at the firm Sean Farrell explains that this situation has emerged as money from traditional finance is making headway into crypto.

"The correlation has become more pronounced with Bitcoin and the wider crypto market now being strongly correlated with technology stocks because of legacy market capital entering the fold," said Farrell.

The lack of overly frothy valuations could be attributed to the fact that the most recent Bitcoin halving in May 2020 caused a comparatively lower increase in Bitcoin's market cap,370%, than the 420% increase observed in 2016.

The coin's Market Value by Realised Value ratio is another factor that could spur the price rally. Bitcoin's MVRV is showing levels as low as April 2020, a point at which the coin saw an upturn and established a bullish run to $57,000.

FSInsight also says the dynamics of supply have a role to play in this prediction. The report observed that at least 75% of Bitcoin's circulating supply is illiquid, hence a bullish outlook.

 "The current supply dynamics can best be described as a powder keg. The question remains who lights the match," the report read.

Ethereum is remarkably undervalued

For Ethereum, the report pointed to the disinflationary impact of the burn mechanism that came by implementing the EIP-1559 protocol. In addition, FSInsight analysts observed that the transition into PoS consensus would also play a part in driving the price higher.    

Farrell added that the growth of decentralised finance applications and increased adoption of NFTs has made the Ethereum network highly undervalued.

"All assets can sell off and drop another 50% if the Fed hikes 4% tomorrow or next month. But right now, as things stand, the upside to both Bitcoin and ETH is much larger than the downside," he argued.

These remain just predictions that could be right or wrong, but optimism reigns supreme.