The price of bitcoin (BTC) could rise tenfold after the halving that will take place next month, the creator of the well-known BTC stock-to-flow (S2F) price model PlanB said on Thursday, April 16.
The famous analyst predicts that halving the reward per block that is less than 30 days will cause a frantic bull run that will take cryptocurrency # 1 to new highs, according to its traditionally accurate S2F model.
Bitcoin price should rise 10x 1-2 years after halving
The pseudonymous but popular analyst PlanB went to Twitter to share your thoughts on the bitcoin price after the next halving. He stated that he expects the third halving of BTC to be like the previous ones in 2016 and 2012.
After these two halvings bitcoin saw a meteoric rise in the months after the event as bitcoin hit new all-time highs. Experts have argued that this time it could be different due to the looming recession as COVID-19 brings the world economy to collapse.
However, PlanB insists that the bitcoin price is perfectly in line with the stock-to-flow model. In fact, he expects the bitcoin price to gain at least 10 times its current price a year or two after miners' rewards are cut in half.
PlanB noted that the May halving will be a “decisive” event for the stock-to-flow model. In other words, if Bitcoin is not multiplied by ten, we should consider its invalidated Bitcoin price forecast model.
IMO #bitcoin 2020 halving will be like 2012 & 2016. As per S2F model I expect 10x price (order of magnitude, not precise) 1-2 yrs after the halving. Halving will be make-or-break for S2F model. I hope this halving will teach us more about underlying fundamentals & network effects pic.twitter.com/kiTdN0n3Lu
– PlanB (@ 100trillionUSD) April 16, 2020
Bitcoin is right on target
In mid-March, Bitcoin experienced the worst loss of a single day since 2013. However, PlanB kept up that, despite the shock, Bitcoin was still in line with the S2F model, as it remained within the bands of the model.
More recently, I observe that Bitcoin's Relative Strength Index (RSI) is the weakest it was before halving. RSI is a technical indicator that shows whether an asset is oversold or overbought at a certain price. As of right now, BTC's RSI is at record lows, suggesting that cryptocurrency # 1 is chillingly oversold just a few days before halving.
Bitcoin's halving (quantitative tightening if you like) cuts miners' incomes in half. This BTC annual inflation decreases, subsequently improving its stock-to-flow ratio as it approaches gold.
The stock-to-flow model has historically predicted the price of bitcoin correctly. Interestingly, the model even took into account the unprecedented bloodbath last month.
Currently, Bitcoin is just above $ 7,000. According to the PlanB model, BTC should hit $ 100,000 in December of next year.