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Bitcoin was halved for the third time in 2020. Under the influence of the epidemic, the price of Bitcoin did not rise as expected in the first half of the year. However, after entering the second half of the year, especially by the end of 2020, Bitcoin began to accelerate and exceeded 28,000. Then began to soar. At present, it has exceeded 30,000 US dollars, and Huobi is quoted at 33,963 US dollars.
In the atmosphere of the bull market, Bitcoin believers called out clear price targets, such as $55,000, $100,000, and $288,000. So why do people believe that Bitcoin will rise to $100,000? This is mainly due to two people, Saifedean Ammous and PlanB.
Professor Saifedean Ammous first introduced the “stock-to-flow” model of the commodity market in his 2018 book “Bitcoin Standard” to explore the scarcity of Bitcoin. In March 2019, PlanB used the “stock-to-flow” (stock-to-flow) model for the first quantitative study of Bitcoin’s scarcity and price.
PlanB found that in the logarithmic form of stock/production ratio (S2F, a quantitative form of scarcity) and market value, gold, silver, and Bitcoin are on a straight line of regression.
The current gold stock/production ratio (SF) is 62, and the market value is 8.5 trillion US dollars; the silver stock/production ratio (SF) is 22, and the market value is 308 billion US dollars. After the halving in May 2020, the Bitcoin stock/production ratio (SF) will rise from 25 to 50. Therefore, it is estimated that the market value of Bitcoin will rise to $1 trillion, which is equivalent to the price of Bitcoin at $55,000.
On April 28, 2020, PlanB improved the previous “stock-output” model and obtained the “stock-output cross-asset model”. He found four definite Bitcoin clusters, and each cluster has a very different S2F-market capitalization combination, which in turn is consistent with the halving and changing Bitcoin narrative. 1. Bitcoin “proof of concept” (S2F 1.3, market value of 1 million US dollars); 2. Bitcoin “payment” (S2F 3.3, market value of 58 million US dollars); 3. Bitcoin “electronic gold” (S2F 10.2, market value of 5.6 billion U.S. dollars); 4. Bitcoin “financial assets” (S2F 25.1, market value of 114 billion U.S. dollars).
These four Bitcoin clusters, together with the S2F-market value of silver and gold, will form a perfect straight line with an R2 value of 0.997.
From 2020 to 2024, the S2F of Bitcoin will be between 50-56. Calculated by 56, the market value of Bitcoin will reach 5.5 trillion U.S. dollars, and the price of a single Bitcoin will be as high as 288,000 U.S. dollars.
Based on the above model of scarcity and market value, coupled with the common market hype, some people dare to call out that the price of Bitcoin will reach 100,000 US dollars or even far exceed 100,000 US dollars.
Of course, PlanB’s S2F valuation model describes the long-term law, and the short-term market is affected by many factors.
However, scarcity alone does not guarantee a high price. It must really meet people’s needs. It would be better if a consensus can be reached among most people. And does Bitcoin meet people’s needs?
Therefore, cryptopunk Jameson Lopp said, “Bitcoin is mooning, it just hasn’t reached your country yet.” Bitcoin has broken new highs, but it hasn’t reached your country yet. TheCryptoLark said, “Every dollar printed is a dollar spent on advertising bitcoin” every fiat currency printed is an advertisement for bitcoin.
However, it must be remembered that Bitcoin is ultimately a social experiment. Satoshi Nakamoto once said on the forum: “I’m sure that 20 years from now, Bitcoin will either be awesome or will not succeed. There is no third option.”