Bitcoin Valuation and Global Liquidity
In its latest report, Bitwise stated that Bitcoin (BTC) remains significantly undervalued compared to the money supply despite entering a phase of global liquidity expansion.
At this point, Bitwise assessed Bitcoin's fair value at $270,000 and gold as approximately 75% overvalued.
Bitcoin remains significantly undervalued despite a surge in global liquidity, according to Bitwise's monthly report.
Bitwise noted that global liquidity has increased again due to the $1.9 trillion annual US Treasury issuance, $2,000 cash payment plans, and the end of the Fed's quantitative tightening.
The report also noted that events such as the $110 billion fiscal stimulus from Japan, the $1.4 trillion stimulus from China, Canada's resumption of quantitative easing, and more than 320 interest rate cuts worldwide were also factors contributing to global liquidity in the last two years.
While these factors have pushed the global M2 money supply to a record $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 trading around 75% overvalued.
Ethereum and Treasury Company Trends
Bitwise also evaluated Ethereum (ETH) in addition to Bitcoin. According to data, Bitwise noted that Ethereum (ETH) treasury companies (DAT) purchased only 370,000 ETH in November.
This marks a dramatic 81% drop from August's peak of 1.97 million ETH. Bitwise noted that the DAT trend, once believed to kick off an altcoin season, is now rapidly losing momentum.
Bitwise points out that as mNAV continues to decline and purchasing power weakens, small DAT companies face extinction due to their inability to secure financing.
“Bitmine, led by Wall Street strategist Tom Lee, has taken the lead and remains one of the few firms making acquisitions.
Bitmine currently holds more Ethereum than 68 other treasury companies combined.
But the model is breaking down. Premiums are shrinking, purchasing power is evaporating, and small players are facing extinction. While DAT purchases still exceed Ethereum's 80,000 monthly supply, the gap between buyers is rapidly narrowing.