October 6, 2019 by Victor
One of the most important banking institutions in germany, Bayern LB, has recently expressed on the predictions of an upward trend for the phenomenal price of bitcoin. Its price could reach the 90 000 $, which can potentially replace the gold in the future.
Contents
The model stock / flow
The analysts of the bank Bayern LB have made a study on ratios of stocks / flows of gold and Bitcoin, in particular on the impact of supply reduction on the value of the assets. They have predicted a bullish trend reaching the $ 90,000 to the bitcoin based on a reduction of half of the BTC in circulation by 2020.
The report, titled “Is bitcoin is outshining gold?” highlights the ratio of stocks to flows (SF), a mathematical tool designed to determine the strength of an asset relative to its supply (stock) and its annual production (flow). Precious metals are the main products on which to apply this rule.
In effect, the value of an asset depends on its SF. This being the case, the researchers observed a strong correlation between the market price of Bitcoin and its SF.
This result is consistent with some analyses made by various supporters of virtual currencies, such as the author of the standard Bitcoin Standard Saifedean Ammous and the analyst Plan B.
Is Bitcoin outshining gold?@saifedean introduced the stock-to-flow approach to Bitcoin. It serves to quantify the “hardness” of an asset. We took the quantitative model of @100trillionUSD (using Bitcoin’s stock-to-flow ratios to explain stis market value) for a spin bear elves.?
— BayernLB (@BayernLB) October 1, 2019
A stroke of genius of Satoshi Nakamoto
The strong demand for gold is attributed to its rarity, that is to say, to its limited annual production. Its value SF being the highest, its utility as a currency is also a culminating, according to this passage of the report :
“The ratio of stocks/flows also serves as a quality criterion for the foundation of money creation. Historically speaking, it is invariably the product of the base with the ratio of stocks/flows, the most high at the time, which has been used as currency because it has allowed for the better transfer of value in time “.
The bitcoin and gold share many similarities, including limited circulation, and the inflation is under control. The next reward per block will be halved in may 2020, which confines the annual supply of the Bitcoin, generating and 6.25 BTC per block mined. The scarcity of the virtual currency will increase then definitely its price.
Bayern LB concludes his report with the belief that the ratio SF of the Bitcoin frôlera gold next year.
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