Altcoin News: A Large German Bank Predicts a Rise of Bitcoin to $90,000
October 2, 2019, by Marko Vidrih on ALTCOIN MAGAZINE
The German bank Bayerische Landesbank (BayernLB) presented a new analytical paper, in which they compared the policy of issuing Bitcoin with the release of various precious metals.
According to the authors, the ratio of already issued assets to newly entering the market (stock-to-flow ratio or S2F) can serve as a clear indicator for determining their “hardness”.
Bitcoin’s emission value is not subject to change, which makes cryptocurrencies look like gold, BayernLB notes. At the same time, gold has earned a high S2F ratio for thousands of years of its existence, while it was originally laid down in the Bitcoin code. The authors declare that the substantial superiority of the existing offer over the new issue of an asset is the preferred characteristic for a cash exchange commodity.
For example, palladium has a low S2F ratio, since in its case the available offer is small relative to the new release. Thus, it cannot fulfill the function of money, since an existing proposal can easily be diluted with a new one.
According to the authors, the fact that Bitcoin is mostly in demand as a monetary asset is an advantage for analysis, as it makes the S2F model more accurate and does not cause sudden changes in demand from market participants that could use it for other purposes.
Analysts also mention two upcoming halvings of the largest cryptocurrency, predicting that as a result of these events, the S2F Bitcoin ratio will fall below gold levels:
“If the May 2020 stock-to-flow ratio for Bitcoin is factored into the model, a vertiginous price of around USD 90,000 emerges. This would imply that the forthcoming halving effect has hardly been priced into the current Bitcoin price of approximately USD 8,000 (the current model value is roughly USD 7,500).
BayernLB was founded in 1972 and is the seventh-largest bank in Germany, controlling assets totaling €220 billion.
Author: Marko Vidrih
