Crypto bounces with bitcoin at $3,400 but where is fair value from here?

Crypto is bouncing today as hopes return that the bear market may be nearing its end. That may be premature but let’s enjoy the moment.

However, this could be the start of consolidation of bitcoin around these levels, although stockmarket volatility putting bearish pressure on the tech sector is not a promising backdrop.

Nevertheless, there is no sign yet of institutions pulling back on their plans to enter the crypto market. Any delay or shelving of those plans, for example with the Bakkt launch, would be a huge red flag.

Weiss ratings said it was time to buy last week as the bitcoin price flirted with $3,000. That’s a brave call but there may be indications that the worst has indeed past.

According to Coinmarketcap data BTC is 5% higher at $3,448, with other top coins following along.

EOS is 10% up at $2.16 and Litecoin, which last week jumped above the two Bitcoin Cash coins, is priced 9% better at $28.58.

BCH is 7.5% higher at $88, with BSV not far behind on $79, 4.7% higher in the past 24 hours.

BTCUSD 2-hour chart, Bitstamp, 17 Dec 2018, courtesy TradingView

Moving back to “fair value”?

Tom Lee of Fundstrat said last week that he was tired of giving price targets, which is understandable given that his $15,000 year-end target is way off the money. However, he was willing to provide a fair value number.

“Fair value is significantly higher than the current price of Bitcoin. In fact, working backwards, to solve for the current price of Bitcoin, this implies crypto wallets should fall to 17 million from 50 million currently.”

He continues:

“If bitcoin wallets approach just 7 percent of Visa’s 4.5 billion account holders, fair value would be $150,000 per bitcoin.”

Lee says that fair value for bitcoin today, as determined by wallet openings, is “$13,800 to $14,800”, implying that the market is massively mispricing the top crypto asset.

Bitmain near bankrupt?

With mining unprofitable at these price levels, and persistent rumours of trouble at Bitmain, the bankruptcy of the Chinese copany would be a sign that capitualtion has arrived and the corner about to be turned.

The latest from the rumour mill says Bitmain has burnt through the cash it has raised in the run up to the launch of its IPO and only has 750,000 BCH left. At current prices that equates to $66 million.

When Bitmain filed its IPO it claimed to have $800 million worth of crypto, mostly in the for of BCH. It is not known how much Bitcoin SV the company holds, if any.

Although a Bitmain bankruptcy might threaten in the short term the security of the bitcoin network, its hardware could be picked up by competitors at knock down prices, allowing for new entrants to enter. This assumes that the difficulty adjustment has time to a=catch up with the falling hash rate.

Bitmain has cornered the market in bitcoin mining with its ASIC processors specialises designed for conducting BTC proof of work hashing.

Coinbase supports USDC

Coinbase announced yesterday that it is now supporting USDC stablecoin. It marked day 7 of its 12 days of Christmas promotional initiative that has included token giveaways and yesterday the launch of an educational resource.

That fiat “airdrop”

Probably not a sign of any significance but some have as a sign of the industry’s health, a bitcoin billionaire did an literal “airdrop” of Hong Kong dollars (HKD). Claims that it amounted to millions being thrown from the top of apartment buildings was contradicted police who said they had only fond about HKD5,000. Yet others say that the Robin Hood character is a well-known scammer who has been selling “mining” equipment for Filecoin – a coin that hasn’t been released and only trades as a futures product.

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