German Bank Predicts BTC Will Reach $90,000: Analysis

German Bank Bayern LB, issued a report entitled ‘’is Bitcoin outshining gold’’ saying that the cryptocurrency will reach $90,000 as we are reading further in the Bitcoin latest news.

According to the report, the bank’s researchers delved into the stock-to-flow ratios of bitcoin vs. gold.  This ratio is an analytical method that is usually used within commodities such as silver and gold to ascertain the scarcity or as the reporters say the ‘’hardness’’ of the asset based on the circulating supply and annual production. The higher the SF ratio of an asset is, the more valuable the asset is.
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The report also noted that when the analysis is applied to Bitcoin, a strong correlation will emerge between the market price and its SF.

The German Bank attributed the findings to both PlanB and Ammous’ plan to become so compelled they felt the need to test the method. According to the researchers, one of the main reasons the gold is currently in such a high demand for so long is because of its scarcity. The gold cannot be whimsically increased and the gold yields a limited annual production and already has a substantial foundation of supply. The report also suggests that SF is basically a judge of monetary utility. The next block reward halving will happen around May 2020 and Bitcoin’s annual supply will be decreased by half and will be generating 6.25 BTC per block. The researchers pointed out:

 “Bitcoin will probably already succeed in attaining a stock-to-flow ratio similarly high to that of gold in the coming year. If the May 2020 stock-to-flow ratio for Bitcoin is factored into the model, a vertiginous price of around USD 90,000 emerges. This would imply that the forthcoming halving effect has hardly been priced into the current Bitcoin price of approximately USD 8,000 (the current model value is roughly USD 7,500).”

The report pointed out that with a caveat that even the most ridiculous statistical model can ‘’fail miserably when attempting to predict the future.’’ However, the researchers from the German Bank noted that the real test will be the 2020 halving as we pointed out previously in the coming altcoin news.