German bank predicts $90.000 bitcoin because of halving

The value of bitcoin could hit $90.000 next year according to a German bank. They see the halving as an unique aspect of bitcoin. That sudden increase in scarcity in bitcoin’s stock-to-flow will underline its status as ‘an ultra-hard type of money’. BayernLB compares bitcoin with gold, of which the stock-to-flow ratio will hardly increase by May next year, while bitcoin’s halving will cause a tremendous increase in scarcity.

The researchers from BayernLB underline that their predictions aren’t to be taken as financial advice. However, they see that bitcoin’s demand is still growing. At the same time they see a sudden drop in availability, creating scarcity. If their theoretic models holds, than next year’s halving can cause bitcoin’s price to skyrocket towards $90.000. “The harder Bitcoin is, the greater the value attributed to it”, the researchers stated.

Currently bitcoin is worth approximately $8300. Back in July 2016, when the mining reward dropped from 25 BTC to 12.5 BTC, one bitcoin was worth approximately 640 dollars. Using the BayernLB’s economic model would expect bitcoin to be valued $7500 in the current cycle, and that cycle will and in Spring 2020.

The researcher from the German bank expect bitcoin to increase its value over the next five years. After the halving in May the ‘hardness’ of bitcoin is quite similar with gold. In 2024 a new halving will take place. As a result ‘Bitcoin’s degree of hardness will again increase massively’.

What is the bitcoin halving?

Bitcoin mining machines are doing calculations to solve a block. The network rewards miners with a set amount of bitcoin. Every 210.000 blocks that reward is halved. The last bitcoin halving happened in July 2016 when the mining reward dropped from 25 BTC to 12.5 BTC. The next halving will happen in April or May 2020.

Bitcoin price predictions

BayernLB isn’t the only one to do predictions on bitcoin’s pricing, even though — truth being told — it’s quite cool that an actual bank is doing this. Investors and trend watchers have been talking about the bitcoin price for years.

American investor Tim Draper believes that the price of bitcoin will be $250.000 within the next three years. While John McAfee — who recently was chased by the CIA — is still holding on to his $1 million in 2020 prediction. Bank and crypto trader Peter Brands expects bitcoin to move towards $50.000 next year, after it will hit a low around $5500 in February 2020.

Originally published at NEDEROB.