The total market capitalization of cryptocurrencies is currently $225 billion led by Bitcoin (BTC: $7,000) at $120 billion. ICO advisory firm Satis Group is forecasting an extremely bullish trend for cryptos over the next 5 to 10 years in an Aug. 30 report: “CryptoAsset Market Coverage Initiation: Valuation.”
The firm expects cryptoassets to reach $500 billion next year and expand to $3.6 trillion by 2028. Satis also expects massive gains for privacy coins such as Bitcoin, Monero, ZCash and Dash.
So where will new money come from?
Satis’ analysts expect more than 90% of the value to be derived from offshore deposits, which implies that global investors will begin to embrace cryptos as they understand the technology and as their own national currencies undergo devaluation and uncertainty. A July 2018 study by U.K.-based IW Capital found that 19 in 20 Brits have invested in cryptocurrency without fully understanding it.
(The story continues below.)
According to Satis Group, Bitcoin and Monero will see the biggest value increases by 2028.
Bitcoin Price Forecast
At such a trend, Bitcoin could reach $96,000 in five years against the U.S. dollar with Monero (XMR: $125) possibly rising to $18,000 and Decred (DCR: $40) to $535. The Satis report estimates that crypto market cap to break above $1 trillion in 2021 with Bitcoin possibly trading at $32,914 in 2019 and $143,900 in 2028.
The 19-page report was written by researchers Sherwin Dowlat and Michael Hodapp.
Bullish On Privacy Coins
So where should traders consider investing their capital?
Satis is most bullish on privacy coins such as Bitcoin and Monero (projected 38,391% increase for XMR). Dowlat and Hodapp said, “The largest upside we see in the entire cryptoasset market is in the Privacy sector …. Not only do these coins target the same large and lower velocity store of value market as BTC and Currencies, they present a much deeper value proposition within those markets.”
They’re also optimistic on Dash (projected 1,500% increase), ZCash (projected 6,000% increase), Verge and PIVX, all of which have privacy features.
(The story continues below.)
From “CryptoAsset Market Coverage Initiation: Valuation” by Satis Group.
Bearish On Bitcoin Cash And Ripple
On the opposite side, the report was harsh on coins such as Bitcoin Cash and Ripple. “We [see] … meaningful downside from networks that have inherited brand recognition and potentially short-lived adoption during hiccups from their fork-parent (such as BCH), and very little value in networks that are misleadingly marketed and not even required for use within their own network (such as XRP).”
Ripple (XRP: $0.30) could drop to $0.01 and Bitcoin Cash (BCH: $561) to $268.
However, Dowlat and Hodapp were bullish on Ethereum (ETH: $261): “At current levels we still believe ETH to be undervalued relative to the share of the cryptoasset market’s TAM it targets.”
(The story continues below.)
“Despite the broader bitcoin and crypto bullishness, the report’s predictions for tokens like Bitcoin Cash, XRP and application-specific utility tokens are quite downcast.” https://t.co/KI6TYZliX4
— Satis Group (@thesatisgroup) August 31, 2018
Evolving Valuation Methods
Satis, which has offices in New York and San Francisco, uses a combination of three valuation models to arrive at their predictions: top down, peer-based and bottom-up. These take into account the global quantity of money, crypto adoption rate and discounted cash flow. But the firm cautions that the valuation method for cryptos is still evolving.
“In an entirely new asset class, consensus around valuation methodology is still evolving. Traditional securities like stocks and bonds are often valued based on their cash streams to securities’ holders, typically using either a DCF or multiples approach relative to the cash streams,” said the researchers.
They add that “as the industry matures, fundamental valuation techniques will begin to more closely approximate trading prices.”
Articles by Marvin Dumont:
Starbucks, Microsoft Back Bitcoin ETF And Stakes Are Huge
Bitcoin’s Rise Reflects Governments’ Failure To Stabilize National Currencies
ShapeShift To Require Membership Amid Regulatory Concerns
Disclaimer: The views and opinions expressed in this article belong solely to the author. Information contained herein should not be construed as investment advice.
