In its latest report, Bitwise said that Bitcoin (BTC) remains significantly undervalued relative to the money supply despite entering a phase of global liquidity expansion.
At this point, Bitwise assessed the fair value of Bitcoin at $270,000 and that of gold as approximately 75% overvalued.
Bitcoin is trading below its fair value!
Bitcoin remains significantly undervalued despite an increase in global liquidity, according to Bitwise’s monthly report.
Bitwise noted that global liquidity has increased again due to the US Treasury’s annual $1.9 trillion issuance, $2,000 cash payment plans, and the end of Fed quantitative tightening.
The report also highlights that events such as Japan’s $110 billion fiscal stimulus, China’s $1.4 trillion stimulus, Canada’s assumption of quantitative easing and more than 320 interest rate cuts around the world have also contributed to global liquidity over the past two years.
While these factors have pushed the global M2 money supply to an all-time high of $137 trillion, Bitcoin is trading about 66% below where it should be relative to the global money supply, Bitwise said.
According to the company’s liquidity model, the fair value of BTC is around $270,000, while gold is overvalued by around 75%.
Risk increases in Ethereum!
Bitwise has also rated Ethereum (ETH) in addition to Bitcoin. According to the data, Bitwise noted that Ethereum (ETH) Treasury (DAT) companies purchased only 370,000 ETH in November.
This represents a dramatic 81% drop from the August high of 1.97 million ETH. Bitwise noted that the DAT trend, once considered the kickoff to an altcoin season, is now rapidly losing momentum.
Bitwise points out that as mNAV continues to decline and purchasing power weakens, smaller DAT companies are at risk of disappearing due to their inability to obtain financing.
“Bitmine, led by Wall Street strategist Tom Lee, has taken the lead and remains one of the few companies making acquisitions.
Bitmine currently holds more Ethereum than 68 other treasury companies combined.
But the model is collapsing. Premiums are falling, purchasing power is evaporating and small players are threatened with extinction. Although DAT purchases still exceed Ethereum’s monthly supply of 80,000 units, the gap between buyers is quickly closing.
*This does not constitute investment advice.
