PlanB, a professional cryptocurrency trader has gone through the trouble of carrying out a mathematical analysis between Bitcoin, Gold, and Silver. He has correlated their Stock Flow to determine their yearly scarcity and what makes them monetary goods. If that’s a lot to wrap your head around, the part you should take out is that Bitcoin’s price after May 2020 will be $55,000 based on PlanB’s prediction.
Bitcoin’s Halving in May 2020 Will Boost its Price to $55,000
On March 26, PlanB tweeted that his model predicts that after Bitcoin’s halving in May 2020, its price will be valued at $55,000. Likewise, Bitcoin’s market capitalization which is currently $72 billion will increment to $1 trillion. Reference was also made to an analysis he had carried out to arrive at these values.
According to PlanB’s model, Bitcoin’s value is driven by its scarcity and this scarcity can be compared to that of Gold and Silver. The virtual asset has a fixed supply of 21 million and the number of coins that can be created halves every four years. The latter is what is known as Bitcoin halving, where the number of coins that can be produced by miners declines. This also means that the reward they receive will decline.
Model Also Reviews Bitcoin’s, Gold’s and Silver’s Supply Flow
PlanB’s model also talks about Stock Flow (SF) and in his opinion, Stock is the existing supply of an asset. Flow, on the other hand, is the amount that can be produced on a yearly basis. Therefore, Stock Flow determines the scarcity of an asset and the higher the SF, it means it is a monetary good.
As of December 2017 during the bull run, Bitcoin had an SF of 22 and market value of $250 billion which the analyst says is similar to that of Silver which is currently 22 with a market capitalization of $308 billion. As such, Bitcoin is a monetary good like Silver.
Comparison Between Bitcoin’s and Gold’s SF
In comparison with Gold, Bitcoin currently has an SF of 25 and 0.7 million coins can be mined in a year. Going by PlanB’s explanation, the SF at 25 means that it will take 25 years before we can have the current stock of 17.5 million coins. Likewise, Bitcoin’s SF will double to 50 by next year which is almost similar to Gold’s current SF of 62 (with a market cap of $8.5 trillion).
The analyst concludes that after May 2020 when Bitcoin halving occurs, its price will hit $55,000. The model goes on an on to talk about things that even this writer can’t comprehend, but here’s another interesting fact we were able to pull, Bitcoin has the potential of hitting a market capitalization of $1 trillion after the halving.
PlanB further said people have, so far, asked him how that will be a possibility. In his own words:
silver, gold, countries with negative interest rate (Europe, Japan, US soon), countries with predatory governments (Venezuela, China, Iran, Turkey etc), billionaires and millionaires hedging against quantitative easing (QE), and institutional investors discovering the best performing asset of last 10 yrs.
It is worthy to note that PlanB’s prediction is closer than we expect and that is next year. Other analysts, for instance, have predicted Bitcoin’s price a few years ahead. An example is MagicPoopCannon who said it’ll be $150,000 by August 2023, and AngeloBTC is confident that it’ll be $30,000 by 2021.