The founder of on-chain analytics firm CryptoQuant has said Bitcoin could reach a target of $112,000 this year, driven by ETF inflows.
Bitcoin could reach $112,000 based on inflows into the ETFs
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The analyst has used the ‘Realized Cap’ indicator to find price targets for the coin. The Realized Cap refers to a capitalization model for Bitcoin that calculates the total value of the asset by assuming that the true value of each coin in circulation is the price at which it last traded on the blockchain.
If it is assumed that a token’s previous transaction involved a change of ownership (i.e. buying and selling), then the last transfer price would correspond to the coin’s cost basis.
Because the Realized Cap essentially adds up the cost basis of all investors, one way to look at the metric is as a measure of the total amount of investment holders have put into the coin.
Naturally, the Realized Cap increases as transactions take place at a higher spot price. Something that could be particularly influential for Realized Cap this cycle could be spot ETF inflows.
The spot ETFs, which finally received approval from the US Securities and Exchange Commission (SEC) last month, have been buying Bitcoin at relatively high prices to expand their holdings, increasing the realized limit.
The chart below shows the data for the spot ETFs and Bitcoin Realized Cap positions.
The trend in the spot ETF holdings and BTC Realized Cap | Source: @ki_young_ju on X
“The Bitcoin market has seen $9.5 billion in spot ETF inflows per month, potentially increasing the realized cap by $114 billion annually,” Ju explains. “Even with $GBTC outflows, an increase of $76 billion could increase the realized cap from $451 billion to $527-565 billion.”
The market value to realized value ratio (MVRV) can provide some clues as to how the realized cap might be relevant to the spot price. This indicator tracks the BTC market capitalization and the realized capitalization ratio.
“Historically, the BTC market bottoms occur at an MVRV of 0.75 and a top at 3.9,” notes the CryptoQuant founder. Based on this fact, the table below shows that ceiling and floor prices can be defined for the asset.
The trend in the ceiling and floor prices for BTC based on the Realized Cap | Source: @ki_young_ju on X
As the influx of spot ETFs continues to come in, the Realized Cap will only continue to rise, and thus the cryptocurrency’s potential cap will increase as well.
Zoomed in view of the price ceiling and floor | Source: @ki_young_ju on X
“With current spot ETF inflow trends, the top price could reach $104,000 – $112,000,” says CryptoQuant CEO. “Without hype, maintaining the current level of 2.07, the price would be $55-59k.”
In the best-case scenario, if Bitcoin had reached the $112,000 target, the cryptocurrency would have risen more than 126% from the current spot price.
BTC price
At the time of writing, Bitcoin is trading around $49,400, up more than 15% in the past week.
Looks like the price of the coin has shot up over the past day | Source: BTCUSD on TradingView
Featured image from Shutterstock.com, charts from TradingView.com, CryptoQuant.com
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