Bitcoin on Ferocious Rally as Weiss Ratings Became Bullish

Weiss Ratings gave an outline of the main reasons why Bitcoin (BTC) investors should be bullish about BTC. It now sees a ferocious rally with the price of the cryptocurrency expected to reach $70,000 next year. Also, the Federal Reserve’s massive money-printing and institutional investments into cryptos add to the bullishness.

Bruce Ng and Juan Villaverde, Weiss Ratings’ analysts, noted in the previous week why investors must remain bullish about Bitcoin even though it has several sideways consolidations. Currently, Weiss Ratings ranks BTC first among all cryptocurrencies overall.

One of the three key reasons these analysts are bullish about Bitcoin comes from a price prediction based on the stock-to-flow analysis (S2F). The famous forecasting model directs to a ferocious rally during the next 12 months or more.

According to Ng and Villaverde, S2F is based on the common-sense notion of “the scarcer a commodity is, the more valuable it becomes.”

In addition to that, circulating supply measures scarcity. For instance, gold has an S2F of 62. This is the number of years of current production needed to match global above-ground holdings.

Following the May Bitcoin halving, they create 6.25 new BTCs every 10 minutes. With that, it will take about 56 years for new mintage to match Bitcoin’s circulating supply. Ng and Villaverde stated, “Notice how close that is to the S2F number of gold, which makes sense because Bitcoin is fast becoming a major rival to gold as a safe-haven investment.

They also said that the last S2F predictions line up quite well with the actual price performance of Bitcoin.

The analysts explained, “Now, based on the history of the halving, current S2F analysis says Bitcoin should reach $70,000 by – sometime around mid-2021.”

And in case it only went half right, investors could still triple their money.

More Reasons

Now, the other two reasons Weiss Ratings’ analysts noted are the QE infinity and institutional money flowing into cryptocurrencies. Aside from that, the COVID-19 outbreak environment has made the Federal Reserve print $2.9 trillion in new paper money in a short span of 13 weeks, or approximately $22 million a minute. They exclaimed that this is a corruption of money use on an industrial scale. They also believe that investors will pour money into Bitcoin and gold as a safe haven. That is, once they lose confidence in paper money.

Japan Going Crypto?

During the early stages of the pandemic, investors in Japan boosted their crypto holdings before the government issued economic relief payments.

Based on a Japanese news outlet Nikkei report, the Bank of Japan announced the supply of M3 in the country. This is a measure of different money stock in circulation. It showed that the supply surged by 5.9% in June to $13.5 trillion.

Moreover, the number of liquid assets available to residents of Japan have risen. This happened after the government issued 100,000 yen or about $936 stimulus payments to individuals. They issued 300,000 yen to a few households, and other payments to firms in response to the coronavirus pandemic.

Then, Nikkei revealed that such payments had made the cash flow in Japan abundant, with fewer increasing their spending habits. If the money would go towards any number of asset markets, it might form a bubble as quantitative easing happens while inflation is limited.