Innovative definition of the Bitcoin price model, this bank believes that BTC will reach $ 90,000 in 2020
A German bank with a government background made a prediction on the price of bitcoin, and it is expected that the price of bitcoin will halve in May 2020 and the price will reach $ 90,000.
The research paper mentioned Bitcoin Standard author Saifedean Ammous. German bank Bayern LB stated that the halving will reduce the amount of Bitcoin output, from 12.5 Bitcoins (per block) to 6.25, which will highlight the scarcity Sex and other characteristics-this is why gold has maintained high value over the past few thousand years.
The value of scarcity can be calculated by dividing the amount of bitcoin currently in circulation (that is, “stock”) by the rate of output of bitcoin (that is, “flow”). The theory states that the higher this “stock-flow” index, the more “hard” the currency. Bayern LB senior foreign exchange analyst Manuel Andersch believes that the asset’s stock-to-flow ratio is a way to quantify the “hardness” of an asset. Andersch says:
“Historically, at that moment, it (gold) has always been the commodity with the highest stock-to-flow ratio and has been used as currency because it enables the best value transfer over time.”This is because, relative to supply, assets with lower production volumes face less risk of inflation. Bitcoin’s situation is unique because this asset prevents its supply from increasing programmatically. Andersch wrote:”Given that Bitcoin has no other use at all, any other development in demand will not affect its price composition.”
The bank concluded that by half, Bitcoin’s “stock-flow” index would soar from 25.8 to around 53. After that, “the sky-high price of about $ 90,000 will appear.”
But Bitcoin is in a downward trend and has fallen to $ 8,300 this week. How is it possible to achieve such a big rise in a short time? The bank said that Bitcoin does not rely on the efficient market theory of the cryptocurrency market, which believes that known future events are already reflected in existing price performance. Conversely, for Bitcoin, it is more likely to generate revenue when related events occur.”If the stock-to-flow ratio of bitcoin in May 2020 is included in the model, an amazing price of about $ 90,000 will appear. This will mean that the upcoming halving effect is difficult to reflect in the current price of about $ 8,000.However, the bank acknowledges that “even the best statistical model can fail miserably when trying to predict the future.” Such a failure is not the first time: Many people think that halving Litecoin this year will usher in a price surge , But the opposite is true. Litecoin price only increased before halving and then fell sharply.
Nonetheless, Bayern LB’s conclusions indicate that bitcoin was in a unique position when prices skyrocketed. Andersch wrote:”By 2024 (the next halving), its hardness will inevitably increase further to an unprecedented level in human history (the ratio of stock to flow exceeds 100!).””No one really knows what the impact of this currency standard will be. We only know that if Bitcoin does become the currency of the 21st century, it will be because its attributes are the preferred alternative currency. After all, Bitcoin is a fully open currency System, operating on a purely voluntary basis. ”