Bitcoin stock-to-flow ration model reveals a majestic ascend to $90,000 following the halving in 2020.
Bitcoin hardness properties will elevate I to become the 21-century money.
Bitcoin is hovering above $8,200 at the time of writing. However, BayernLB one of the leading banks in Germany believes that Bitcoin has the potential to break above $90,000 following the expected halving event in May 2020.
According to the report released by the bank says that Bitcoin’s stock-to-flow ration will drastically in May 2020. The figures will rise significantly from the current 25.8 to levels around 53.
“If the May 2020 stock-to-flow ratio for Bitcoin is factored into the model, a vertiginous price of around USD 90,000 emerges. This would imply that the forthcoming halving effect has hardly been priced into the current Bitcoin price of approximately USD 8,000 (the current model value is roughly USD 7,500).”
Moreover, the report found that Bitcoin’s maximum supply cap of 21 million makes it an “ultra-hard” type of currency. Bitcoin will hit the same levels of hardness gold exhibits by 2020 while the following halving in 2024 will make it even harder.
“Whereas gold has had to earn its high stock-to-flow ratio ‘the hard way’ over the course of millennia, Bitcoin’s purely digital character enables ‘supply engineering,’ which causes the stock-to-flow ratio to rise at a breakneck pace.”
In conclusion the report says:
Only one thing is clear: if Bitcoin is indeed to become the money of the 21st century, it will be because its properties (above all its high degree of hardness) have been preferred to those of alternative types of money – after all Bitcoin is a completely open monetary system operating on a purely voluntary basis.”