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.
#Bitcoin = exp(-60) * S&P500 ^ 8.7 = $18K 🚀 pic.twitter.com/JSawLgPpwe
— PlanB 🔴 (@100trillionUSD) June 16, 2020
Based on this equation, the crypto strategist says he believes the S&P 500 will trade around 4,300 when Bitcoin hits the S2F target of $288,000.
Market analyst and podcaster Preston Pysh agrees with PlanB and believes that the parity is not likely to end soon as central banks continue to flood the system with money.
“Dude, how could it end soon? We’re about to get even more Schrute bucks added into the system.”
