In a recent research report, German stated bank Bayern LB, predicts a $90000 bitcoin due to the future halvening on May of 2020. The halvening happens every 4 years and it essentially cuts in half the bitcoin rewards to miners every 10 minutes.
The current block reward is 12.5 bitcoins. On May of 2020 the block reward will change to 6.25 bitcoins. This will make bitcoin more scarce. The German stated Bank follows stock-flow logic to evaluate bitcoin and give the price prediction of $90k.
Calculating the value of said scarcity is simple. One must take the current number of bitcoins in circulation (stock) and divide it by the rate at which new bitcoins are produced. In theory, the higher this stock-flow heuristic is, the more suitable for a currency the money is.
In conclusion, the German bank believes that by the time of the halvening, bitcoin’s stock-to-flow will spike. The number will go from 25.8 to around 53 pushing its price to $90000.
So far, bitcoin continues the down trend with its price at around $8300. Even if the price is low at the moment, the German bank suggests that the current value of bitcoin doesn’t include the value of future events. Instead, the events will generate gains as they happen.
source bayernlb.com
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