As of 2020, Bitcoin (BTC) is generally not considered an investment target. Due to the unstable price of Bitcoin, it is not an investment that can be recommended to anyone, but I think that investing in Bitcoin is an interesting topic for adventurous investors.
Bitcoin is the best-performing asset in the past decade, and its performance in 2020 is better than that of the S&P, Dow Jones, Nasdaq and other U.S. stock indexes and gold futures! How will the price of Bitcoin perform in the future?
Bitcoin price prediction-reaching $100,000 from 2022 to 2024
Judging from historical data, well-known crypto asset analyst PlanB believes that Bitcoin may rise in the next few years. By the next halving period in 2024, the price of Bitcoin will increase dozens of times and is predicted to exceed $100,000.
PlanB applies price models (formulas) for precious metals such as gold and silver to Bitcoin, which can explain past Bitcoin price movements, as shown in the chart below:
As of October 2020, the Bitcoin price has not really risen yet, but according to this model, Bitcoin is targeting the June 2019 high of $14,000 by the end of 2020; $26,000 by the end of 2021; $35,000 by the end of 2022; and $35,000 by the end of 2023. Reaching $50,000, rising year by year!
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If this model predicts correctly, around the 2024 halving, the price of Bitcoin will increase approximately 10 times compared to May 2020, reaching $100,000.
On May 12, 2020, as the first block was mined, the third BTC halving occurred. Historical data shows that the Bitcoin halving will inevitably bring about an increase in currency prices. Judging from the market conditions after the first two halvings, the third halving may lead to a bull market a year later.
Using historical data from gold, silver, and Bitcoin, we can develop a formula that predicts market size and Bitcoin price based on stock-to-flow ratios. From May 2020 to the next halving period in 2024, the price of Bitcoin may increase by about 10 times.
S2F model suggests Bitcoin can rise to $100,000?
PlanB predicts that Bitcoin may rise to US$100,000 from 2022 to 2025 and exceed the market value of US$1 trillion in 2028. This prediction is based on the Stock-to-Flow ratio model.
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After the past two Bitcoin price declines, analysis of Bitcoin price increases seems to follow the Stock-to-Flow (S2F) model proposed by Plan B. This metric quantifies Bitcoin’s scarcity.
S2F (stock-to-flow ratio) = Stock (world total: inventory)/Flow (annual supply: flow)
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Stock refers to existing inventory and reserves. Flow is the annual production volume. People also commonly use the supply growth rate indicator, which is flow/stock. Note that S2F=1/supply growth rate.
S2F model The S2F model refers to the quantity of available assets or reserve assets divided by the quantity produced each year. The Stock-to-Flow ratio is an important indicator because higher indicator values in S2F reflect a reduction in the annual incidence of inflation for the asset. Generally speaking, the higher the stock-to-flow ratio, the greater the scarcity.
The chart above shows four quantified BTC clusters (plus raw BTC monthly data for context), silver and gold. They form a perfect straight line.
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I'm using regression analysis to make a S2FX model. Note that the biggest difference from the original S2F model is that I use silver and gold S2F and market value data in the regression analysis. The S2FX model shows a significant relationship between S2F and the market value of these six assets, with a good fit (99.7%).
Bitcoin Price Uptrend Correlation to Gold (Bitcoin S2F Index Close to Gold)
The Bitcoin S2F index after the halving in May 2020 is expected to be 55.92, which is very close to gold’s S2F index of 62. The current market value of gold is US$8.5 trillion.
Gold has the highest S2F, which reaches 62, which means it would take 62 years to produce the current gold stock. Silver ranks second, and S2F is 22. High S2F turns them into monetary commodities.
For commodities, it is almost impossible to get a higher S2F because as long as someone hoards them, the price will rise, causing production to rise and the price to fall again. It's hard to escape this trap.
Bitcoin currently has an inventory of 17.5 million tokens, with a supply of 700,000/year, which means its S2F is 25. This puts Bitcoin in the category of monetary commodities like gold and silver. Bitcoin’s current market cap is $210 billion.
Since the supply of Bitcoin is fixed, this means that the "Bitcoin Halving" is important for the Bitcoin money supply and S2F. The halving causes the supply growth rate (often called “monetary inflation” in the context of Bitcoin) to become a ladder rather than a smooth change.
Unlike some irresponsible so-called cryptocurrency analysts who claim that the price of Bitcoin will rise to $1 million, the price prediction of the S2FX model is supported by theoretical logic, and the first four stages of Bitcoin price trend are fully consistent with the model. deduction.
It is estimated through the S2FX model that Bitcoin's S2F will reach 56 in 2022-2024, and the circulation of BTC will be 19 million, which translates into a unit price of Bitcoin of more than 100,000 US dollars.
LTC founder Li Qiwei reposted WhalePanda's tweet on January 3, 2021, saying: By the end of 2021, we will see 100,000 US dollars in Bitcoin, and LTC will break through all-time highs; and believes that the market value of BCH and XRP will fall out of the top 10 . He successfully predicted that Bitcoin would plummet in late 2017, when he tweeted that he was selling all his Litecoin holdings to ensure profits!
In addition, during the 2020 COVID-19 epidemic, the price of Bitcoin followed the rise and fall trend of traditional financial assets such as U.S. stocks and gold, and this trend may continue in the future! Judging from 50 years of historical data, US stocks and gold have been on an upward trend, which means that the price of Bitcoin will continue to rise!
Of course, special attention needs to be paid to the risks! We can't just listen to the big guys shouting for 100,000 or 1 million US dollars! Historical data shows that every time Bitcoin rises sharply, it will fall by 50%! The price of Bitcoin is currently at an all-time high, and a plunge may be just around the corner!
Although it remains to be verified whether the next stage can be realized perfectly, judging from the general trend of global digital currency development, Bitcoin's performance in the next few years is definitely worth looking forward to.
Bitcoin Price Prediction FAQ 1. Will Bitcoin appreciate in value?
Many crypto enthusiasts believe that "Bitcoin has the rarity of gold" and are optimistic about the rise in value of Bitcoin in the next few years!
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In 2020, the U.S. Central Bank implemented an unprecedented monetary quantitative easing policy, resulting in an oversupply of currency in most markets. Therefore, it will accelerate the promotion of Bitcoin into digital gold, with great appreciation potential.
2. Is Bitcoin investment a scam?
Whether Bitcoin investing is a scam depends on your perspective on this goal. Just like stock investment, isn’t there profit and loss? It is strongly recommended that you conduct thorough research before making any investment decision.
Bitcoin itself is not a scam. Scams are projects or exchanges that use virtual currencies such as Bitcoin to lure you! It is recommended that novices do not invest in unknown altcoins and do not invest in small exchanges. In the end, they may be cut off by the dealer!
The author believes that compared to other cryptocurrencies, Bitcoin’s appreciation potential is obviously higher! It should be noted that in the rapid rise of BTC, a sharp correction is inevitable, especially in leveraged trading, you need to pay attention to the risks!
3. Is Bitcoin legal in China? Can I change it into RMB?
Currently, China does not allow major banks, financial institutions, etc. to participate in Bitcoin transactions, and there is no domestic supervision of cryptocurrency. However, it is not illegal to hold Bitcoin, and individuals can participate in Bitcoin investment at their own risk!
Currently, you can buy and sell Bitcoin with fiat currency through OTC transactions on major digital currency exchanges such as Huobi and Binance! Plus, different countries have specific regulations for Bitcoin!
4. What is the lowest price of Bitcoin?
The lowest price was in October 2010 when Bitcoin was worth less than a dollar at $0.125, and between February and April 2011 it traded at $1.00. It has already increased tens of thousands of times!
5. Is it true that the price of Bitcoin can reach $1 million?
Some Bitcoin enthusiasts believe that the price of Bitcoin will reach $1 million in the future, but I think this is groundless and may be a bit too optimistic.
Although the price of Bitcoin has increased tens of thousands of times in the past 10 years, as its market size increases, the rate of increase will slow down! The 10-fold increase predicted above in the next five years may be more in line with market logic!