October has been a roller-coaster for bitcoin with violent price swings. The price has fallen to the 5 months low near $7,000 only going back days after to above $10,000. The bounce has caused a lot of damage to the bears with nearly half-billion-dollar shorts liquidated on only 24 hours when the price surged by 40%.
Before of bitcoin’s unexpected market moves this week, bullish bitcoin analysts had stayed sure the market will see a massive increase in the next couple of years, giving hopium to crypto holders and believers and also sending away crypto bears at least for now.
Crtpro analyst PlanB who has created the “stock-to-flow bitcoin pricing model” said that bitcoin should hit $100,000 before Christmas 2012 or a year and a half after the halving.
In a video interview PlanB told Raoul Pal, Founder/CEO – Global Macro Investor:
“Somewhere between and year and a year-and-a-half after the May 2020 halving, so say before Christmas 2021, bitcoin should be, or should have been above $100,000. If that’s not the case, then all bets are off and [the model] probably breaks down. I don’t expect that to happen.”
— Real Vision (@realvision) October 18, 2019
The price predicting model developed by PlanB calculates the ration between the actual supply of an asset and the new supply generated.
The more an asset is scarce the more is valued by investors. For example, gold has a stock-to-flow ratio of 62, which means that gold production will need 62 years to meet the actual total supply of gold.
Silver has a stock-to-flow ratio of 22, which means that 22 years are needed to produce the same amount of silver we have today.
Bitcoin has a 25 stock-to-flow ratio which is about to double after the halving while bitcoin becomes more scarce. After the halving, if no major changes happen to the bitcoin network (because bitcoin has not a fixed production cost) bitcoin will have a stock-to-flow ratio of 50.
A similar prediction was made by Anthony Pompiliano of Morgan Creek Digital. After making an accurate prediction of the bottom in 2018, he made another prediction some months ago saying that bitcoin price will hit $100,000:
“In August of last year I predicted bitcoin would go down to $3,000 before returning to $10,000. It essentially did that […] Now I think it’s going to $100,000, but […] there will be more volatility: there will be parabolic runs like we saw in June and then there will be 20-30% drawdowns from that. Along the way a lot of people will call the top at these local highs — they’ll be incorrect.”
Many have predicted enthusiastic numbers for bitcoin in the next few years, going as far as to$1 million dollar predictions, but something that bitcoin is really capable of is that it can surprise everybody.
After the bitcoin surge yesterday, many in the crypto industry think that the surge was caused by the new developments with U.S. and China legislators talking about digital currencies and the blockchain technology bringing more awareness to new people.
While the Libra hearing at the congress was more about Bitcoin than Libra with senator Sherman pointing at the threat Bitcoin poses to the U.S dollar. In China, President Xi Jinping urged for research and development in blockchain, seizing the opportunity to become a global leader in the new emerging technology.
Despite the fact that days with a 40% prise surge are rare in the bitcoin market, mathematically speaking it would only take 8 days with 40% gains for bitcoin to hit $100,000
Do you think a $100,000 bitcoin price is possible before 2021? Feel free to post your thoughts in the comment s below.