Bitcoin to Scale-Up to $90,000 in 2020 Says State-Backed German Bank
By Mark Lemon – Cryptocurrency Specialist
BayernLB, the Munich-based German bank, predicts that Bitcoin could make a monumental leap in 2020 according to a report on Bitcoin versus gold. It was even suggested that the price could lead to $90,000 which would suggest a lot of crypto buying.
BayernLB published its latest research report on October 1, which indicates that the upcoming Bitcoin halving effect has yet to be incorporated into its current lower price of $8,300. This could suggest that the predicted price movement of Bitcoin could be slightly deflated, and we could see more buying Bitcoin than predicted in the long run.
Gold, according to the financial institution, had to earn its high stock-to-flow ratio over the period of a millennia. Bitcoin however, has been predicted to reach this level of stock-to-flow ratio but within a much shorter period.
Manuel Andersch, Bayerische Landesbank’s senior FX analyst and author of the research report says that stock-to-flow ratios serve as a means to quantify an asset’s “hardness.”
“Historically speaking, it has invariably been the commodity with the highest stock-to-flow ratio at that juncture which has been used as money because this enabled the best value transfer over time.”
A commodity’s (such as gold) stock-to-flow ratio is an asset’s amount that is held in reserves, which is then divided by the asset’s amount that is annually produced. The supply of Bitcoin decreases with every halving, meaning this ratio is ever increasing as time goes on. If demand for buying Bitcoin continues to increase as the supply is reduced, then the price could rally much higher.
The author then finishes the report by saying that Bitcoin's stock-to-flow ratio is likely to grow in May 2020, adding that factoring this ratio in by this period, a price of around $90,000 could be achieved. He went on to suggest that the halving effect must not have been priced into the current price and we could see more demand to buy and sell Bitcoin, potentially causing the price to rally.
Don’t forget you can head over to our platform if you’re looking to buy Bitcoin UK from your trusted Bitcoin broker.