If you enthusiastically follow the cryptocurrency news, you know that the Bitcoin price predictions are incredibly popular. It is always thrilling to figure out where the world’s biggest cryptocurrency can go next. The traders and enthusiasts are not the only ones predicting the fate of bitcoin. Recently, Bayern LB, one of the top German banks, published a report stating that the leading cryptocurrency will supersede gold, predicting that the price would go up to $90,000 per BTC post its halving in 2020. We are sure that you have read the headlines about a New York University professor expecting bitcoin to trend to zero. Well, it can be said that everyone has their views, and predictions can go both ways.
According to the German bank, $90,000 Bitcoin in May 2020
Bitcoin is strictly a scarce asset being digital. Bitcoin undergoes a block reward reduction in every four years, which is known as halving. In halving, the number of coins issued is cut in half. According to the recent market scenario, Bitcoin’s inflation rate is around 4%, which is higher than the majority of developed countries in the world. However, in 2020, the cryptocurrency will experience its next halving event, plunging the inflation of Bitcoin to below the 2% target by central banks, making it one of the massive events in the history of digital assets.
As per the reports generated by Bayerische Landesbank (Bayern LB), a Munich-based financial institution, bitcoin’s halving may do miracles for the price of each BTC. In a report published by the bank, which was authored by Manuel Andersch, a senior analyst, it was explained that due to bitcoin’s characteristics and similarities to gold, its price might be easily predicted using a stock-to-flow model – new yearly supply of commodity over above-ground supply of a commodity.
Using the logarithmic analysis done by Bayern LB, the connection between the SF of a commodity and its market capitalization seems more subtle. Meaning, the next halving of the cryptocurrency will give BTC a fair valuation of $90,000 for each BTC. This ultimately implies that the approaching halving has hardly been priced into the current price of the cryptocurrency, which is roughly around UD$8000.
PlanB and Saifedean Ammous, an analyst and the author of the seminal Bitcoin Standard, respectively, attributed the stock-to-flow model shared in the bank’s logarithmic report. PlanB claims that the stock-to-flow commodity model is co-integrated with BTC’s price with utmost accuracy. However, according to the original model published by PlanB calls for a $50,000 BTC after halving in 2020.
$90,000! Not Possible
As per the generous growth model, it may take even longer for bitcoin to reach such a high price point. The cryptocurrency enthusiasts and BTC traders may find it pleasing to read the news, but the same kind predictions have happened before on multiple occasions, and none of them has come true.
Well, people are eagerly waiting for the halving and expecting that the price of Bitcoin will definitely hike in the coming year. Let’s see what happens.