A crypto analyst known as the first to apply the stock-to-flow (S2F) ratio to Bitcoin says BTC is significantly undervalued, based on its strong correlation with the market capitalization of the S&P 500.
According to the widely-followed quantitative analyst, the Federal Reserve’s push to print trillions of dollars in the form of quantitative easing will send both America’s bellwether index and the king coin to greater heights.
“Short story on Bitcoin:
Stock market correlation. S&P500 did 2.6x ($1200 -> $3100), BTC 1900x ($5 -> $9500). Bitcoin looks like a high beta stock. Trillions and trillions of central bank QE money, that boost stock markets around the world, seem to be dripping down to bitcoin!”
The pseudonymous strategist says his analysis shows that BTC and S&P 500 tend to move in tandem.
“In case [you’re wondering]… yes, the S&P 500 and BTC are cointegrated.”
After mapping out the correlation between the two assets, the quantitative analyst busts out an equation that he says highlights why he says BTC is significantly undervalued, with a current fair market value of $18,000.