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Based on the cost to mine bitcoin, Fundstrat predicts the original cryptocurrency will rise to at least $20,000 apiece and as much as $64,000 by year’s end in 2019.
The market research firm recently highlighted an analysis of the relationship between the price of bitcoin and the breakeven cost for bitcoin miners, and the results produce a middle-of-the-road estimate of $36,000 for the year-end 2019 bitcoin price. Furthermore, the range determined by Fundstrat Global Advisors puts a floor on bitcoin at $20,000 – more than twice its current price – and a ceiling of $64,000 – which provides a potential upside of seven times the current price.
The calculations focused on Bitcoin Price to Mining Breakeven Cost Metric, known as P/BE, which Doctor says has “proven a reliable long-term support level.”
“We expect the mining economy to grow over the next several years, and project a BTC price of ~$36,000 by year end 2019 based on the historical average 1.8x P/BE multiple,” an executive summary of the findings uploaded to Twitter by cofounder Tom Lee reads.
To date, the price has averaged 1.8 times the P/BE multiple, though Fundstrat acknowledged that “a material shift in the trajectory of hash power could change the P/BE support level of BTC price”.
This isn’t the first analysis and bitcoin price prediction put forth by Fundstrat, either. In February, Fundstrat Co-Founder Thomas J. Lee promoted a valuation based on bitcoin’s potential share of the alternative money supply that supported a 2022 value of $125,000 per coin.
The company has also kept its finger on the pulse of institutional investors, and a recent survey of themfound that most (82%) believe the four-month bitcoin price crash has bottomed, with the vast majority thinking bitcoin will grow its value to $20,000 or $30,000 this year. Notably, a sizeable proportion (40%) thinks bitcoin could reach John McAfee’s $1 million mark by the end of 2020.