Bitcoin could reach $100,000 after 2020�s halving
Bitcoin could reach $100,000 after 2020�s halving
For a while now, Bitcoin has seemingly moved with rhyme nor reason. Today, the Bitcoin BTC is down 7%, falling off of no clear fundamental event. And just 4 days ago, it was rallying by over 10%, pushing ever closer to near its year-to-date high price of $14,000."Bitcoin could reach $100,000 after 2020�s halving"
Despite the day-to-day volatility, valuation models have begun to arise for Bitcoin, ones that may give insight into where this cryptocurrency can head in the long run.
According to a refreshed model by a leading statistician in this market, should BTC follow a model that it has for over seven years, it could see six digits in the coming two years.
The Road to a $1 Million Bitcoin
You might not know him, but Bitcoin analyst PlanB has a model that may shock cryptocurrency investors the world over.
Before we begin, let�s take a quick look at the definitions of the stock-to-flow ratio (SF) and its effect in financial markets.
The stock is the value of an asset, usually a commodity, above the ground/produced; the flow is the growth in the supply of said asset in any given year. These two sums can be combined to form a ratio, which defines scarcity by how much inflation an asset sees (the higher, the more scarce).
According to a price technical analysis compiled by PlanB, the value of commodities like gold and silver can be plotted, and thus predicted, by a stock-to-flow valuation model.
In a recent tweet, the analyst noted that if you take BTC�s prices in all historical Octobers, then plotted it against the stock-to-flow model, Bitcoin fits it to a 99.5% R2.
The model predicts that should Bitcoin continue to follow the model to an eerie degree of accuracy, BTC could reach over $100,000 a pop after 2020�s halving event. You see, when the cryptocurrency�s block reward reduction arrives, the SF ratio naturally increases, doubling actually.
And as the relationship between the SF ratio and the market capitalization of a commodity is seemingly exponential in PlanB�s model, each halving should bring about a massive bout of growth for Bitcoin.
Timothy Peterson, a Texas-based crypto fund manager, and Bitcoin pioneer, recently laid out the model below which plots how BTC�s performance in the first half of any given year relates to the second half�s performance.
Interestingly, the model, which can be defined as the positive slope y = 1.1409x + 0.5151, fits the trend to a 90% R2.
According to Peterson, Bitcoin gaining 180% year-to-date (effectively the 2019�s first half) implies that it has another 250% (�give or take�) left to run by the end of the year.
A 250% gain from current levels would mean Bitcoin ends the year at $40,000 � practically double BTC�s 2017 all-time high of just around $20,000. According to Peterson, even $50,000 is realistic.
