A new prediction model created by the market analyst PlanB shows that the price of Bitcoin can reach new all-time highs during 2020.
Posted by the prominent trader PlanB here, the article states that the ever decreasing supply of Bitcoin is sure to affect the price of the token in the market.
The whole prediction model is based on the fact that Bitcoin will finally halve its rewards next year, so prices will be pushed up due to the scarcity of the market. According to PlanB, the scarcity, as measured by the stock to flow will drive prices up in his model, which uses a power law formula.
Bitcoin Will Halve Next Year
At the moment, miners get a reward of 12.5 BTC when they mine a block. Next year, the reward will be diminished to 6.25 BTC. This would reduce drastically the supply of tokens which are available in the market right now and would cause an effect in price.
You should know that the last halving happened in 2016. Soon after, Bitcoin’s price started to skyrocket and history went as much of us remember in 2017. Hype increased and prices went up until they peaked at around $20,000 USD.
After that, they went down, mostly because BTC was not yet ready and failed to achieve wide adoption, so the hyped investors saw the value diminishing as some people cashed out.
PlanB defines the prices going up after a halving as something natural in the market. In fact, it has happened every time so far. According to his model, prices could go up 10 times. As PlanB uses to say, “history does not repeat, but it often rhymes”.
He also affirmed that he was very confident in his model because it was actually very similar to gold and silver’s models, which gave him some boost in confidence. The idea is that the trend would push Bitcoin even further upward.
The halvings would put the model more close to the gold one than the silver model, meaning that BTC would really upgrade its status.
Bitcoin Is Better Than Gold
You should know that Bitcoin is often referred to as “gold 2.0”. This is not a surprise since the asset is actually very similar to gold. It is scarce and it can be easily stored as a mean to hold value. However, it is also digital, which makes it even better than gold.
If you are knowledgeable enough, you can easily use Bitcoin even via satellite or radio signal, meaning that you can access it even without the internet. At the moment, gold has a market cap of 7 trillion USD while the crypto market is far less than that. However, if the prices actually reach $55,000 USD, BTC alone would have a market cap of $1 trillion USD. This would be a start.
At the moment, 1,800 Bitcoins are mined daily, however, around 900 BTC will be mined after the halving. Since the costs of mining will remain the same, the idea is that the price of Bitcoin will greatly go up.
Is this the time to invest in Bitcoin? Well, you should know the answer. BTC may not be at its greatest time ever, but it looks like the bull run is just around the corner.