Bitcoin price in 2020 in $ 250,000? The Stock-to-Flow Ratio in the focus

Not a week in the crypto market without a bullish predictions. On 4. November turned up a Paper which looks at the Bitcoin price in 2020 for $ 250,000. The basis of an extension of the Stock-to-Flow Ratio.

By Phillip Horch
6. November 2019BTC $ 8,853.80 -2.25%part Facebook Twitter LinkedIn xing mail

The Stock-to-Flow Ratio brings Bitcoin-price-predictions in the dizzying heights of rise. In may next year, the largest crypto-currency could be according to market capitalization, therefore, in the case of $ 250,000. An anonymously-authored scientific Paper has refined the analysis and some of the defects found.

The Stock-to-Flow Ratio as the basis for Bitcoin-price-predictions

describes The Stock-to-Flow-Ratio, the scarcity of an asset. The ratio (Ratio) is the amount of time it would take for the actual production amount (Flow) until the current inventory (Stock) is reached. In other words: The relationship between inventory and production volume describes the scarcity of a Good. The higher the ratio, the more scarce a Good.

Typically, the Stock-to-Flow Ratio is pulled about the Gold Rate. Here it is on a rising scarcity, the price of gold rises. It is always kept in mind that the demand for the Asset at least remains the same.

This analysis can also be used on the Bitcoin rate to apply – and sometimes dizzying rate forecasts. This is not least due to the fact that the Bitcoin supply, or the Miner reward is halved at regular intervals – the crypto Community is referred to as Halving.

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following the crypto-analysts PlanB and Saifedean Ammous was an anonymous Reddit user, the Stock-to-Flow Ratio in his Paper "On the Apparent Convergence of Bitcoin's USD Market Value Toward the Stock-To-Flow Valuation Model and the Necessary Divergence Into the Narrow Halving the Window".

The anonymous Bitcoin Analyst added that the Stock-to-Flow-Ratio, factors such as price fluctuations, and came to the conclusion that the price of Bitcoin could be the next Halving in may 2020 for US $ 250,000.

The Narrow Halving the Window, and the price of Bitcoin

However, this extremely bullish forecast is not without (at least) one catch: the Narrow Halving Window (NHW). This is the course area by the Bitcoin price moves in the days to the Halving – of the course could vary.

If the forecasts on the basis of the Stock-to-Flow do not apply Ratio, so it is said in the Paper, the Bitcoin needs to be course on the NHW Orient. In other words: If the Stock-to-Flow-not applicable forecast deviates from the price of Bitcoin, according to the NHW.

Bitcoin exchange rate prediction with hook

gives As the author himself, is the described model is highly speculative. This is not least due to the fact that it assumes that "the market price of Bitcoin depends, ultimately, exclusively from the production rate of new Bitcoins".

As the author also admits, the Stock-to-Flow model for a Bitcoin rates of one Million U.S. dollars according to the fifth Halving. For this forecast, the total market capitalization should be between 20 trillion and 200 trillion dollars. The entire amount of all state currencies is compared to estimates of between 10 trillion and 100 trillion US dollars. For a Bitcoin rates of one Million US dollars, the crypto-currency would have to be so to the world currency. The value of world currencies would have to fall on the other side constantly.

Concerns also the premise. Finally, it is in the sense of the Stock-to-Flow Ratio as a General principle that people use Bitcoin – and it was "only" as a store of Value. The demand for new Bitcoins requires a representative of the Thesis so. Although there are some points that speak in favour of Bitcoin as the digital Gold. Also the change in the perception of the crypto currency in the Public as well as a slowly growing adaptation suggest that the demand for Bitcoin rises. Nevertheless, forecasts should be treated with caution.

The Problem with forecasts

forecasts, whether in respect of shares or crypto-currencies, are oriented to be forced in past events. Since about Bitcoin in terms of the Halving won in the past, always a strength, it is a repetition. You can justify it by the shortage of supplies economically. However, the premise that the demand for the crypto-Asset remains the same or even increases, to move in the area of speculation.

here, Too, there are clues that lead to such an optimistic Look to the future. One can assume, for instance, by a rising institutional interest in terms of the physical BTC Futures option trader Bakkt. Also expected to be growing adoption of Bitcoin & co. – through the cooperation of the same company with the coffee house giant Starbucks is a bullish language that is promoted.

Nevertheless, forecasts remain what they are: a look into the future. The previously inadequate regulation of the crypto-market, and always re-emerging suspicion of manipulation warns here to watch the market is critical.

by the Way: Some tips to safe Trading, and a comprehensive information base to Bitcoin, Blockchain & co., can be found in our BTC-ACADEMY. Here along.

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