Is Six Figure Bitcoin Price Actually Reality-Based? A Look At The BTC Value Metrics Per New Studies
Bitcoin Could Eventually Surpass $100,000 According To Different Studies
As Bitcoin enters a new bull trend, experts are wondering whether Bitcoin (BTC) could continue its growth path and reach a new all-time high in the near future. According to the author of Cryptocurrencies Simply Explained, Julian Hosp, Bitcoin could eventually reach $100,000.
Bitcoin Could Surge To $100,000
Dr. Hosp evaluates Bitcoin’s price and how it has evolved during the last few years. He takes into account the Stock-to-Flow Ratio, an index that measures the amount of an asset that is held in inventories (stock) and its annual production rate (flow). This measure describes how much time it would take for the Stock to reach the Flow.
Hosp explained that it would take 62 years in order for gold to reach from Stock to Flow. Meanwhile, Bitcoin would just take 27 years to reach its total circulation of 17.7 million (stock) with 657,000 per year. As soon as the halving happens in May 2020, Bitcoin’s annual Flow is going to be reduced to 328,500 BTC per year. Bitcoin is going to have its new supply reduced from 12.5 BTC per block to 6.25 BTC per block.
Production is one of the most important factors that determine the price of an asset. The analyst explained that gold production increases since miners expect higher profits. This also increases the Gold’s Stock-to-Flow ratio. Thus, the rise in mining output allows gold to reach overproduction and supply exceeds the demand and the gold price comes down. As this happens, the Stock-to-Flow Ratio goes up.
About it, Hosp commented:
“In Bitcoin, even if the price goes up, you cannot produce more Bitcoin – it does not work, not like gold where you can increase production. There is always the same amount of flow because it’s 12.5 Bitcoins every minute. The production remains stable.”
Moreover, the analyst applied the Bitcoin SF Multiple ratios that allows analysts to understand the cryptocurrency’s top and bottoms in the future. He mentioned that the indicator has a 95 percent success rate and it was able to predict Bitcoins overvaluation in different years, including 2011, 2013 and also 2017.
According to Dr. Hosp, the SF Multiple shows that Bitcoin’s current price should be between $8,500 and $9,500. At the same time, there are halvings that separated the SF Multiple cycles.
He has also mentioned that Bitcoin could eventually reach $100,000 and continue growing and be traded around $300,000.
There are other investors in the market, such as PlanB, that believe that the Stock-to-Flow model is able to predict Bitcoin’s price in the future.