Over the past four days, Bitcoin (BTC) has been through it all. After rallying to surpass $13,000 for the second time this year, the cryptocurrency paused, took a breath, then decisively lost steam as bulls failed to maintain momentum.
As of the time of writing this, BTC sits at $11,300, down almost 13% in the past 24 hours. Altcoins are doing worse, with Ethereum, XRP, Litecoin, and other large-cap crypto assets slipping by more than 15%.Related Reading: Bitcoin Hashrate Grows at Fastest Rate Ever; Will BTC’s Price Follow?
Despite this rapid decline, which effectively confirms that BTC isn’t ready for new year-to-date highs just yet, some analysts are still bullish. In fact, one new model suggests that Bitcoin will rally by at least another 200% this year, no holds barred.Bitcoin to Hit $50,000 in 2019?
Timothy Peterson, a Texas-based crypto fund manager and Bitcoin pioneer, recently below which plots how BTC’s performance in the first half of any given year relates to the second half’s performance. Interestingly, the model, which can be defined as the positive slope y = 1.1409x + 0.5151, fits the trend to 90%, implying that it should be fairly accurate. Alright, so now that we have established the model, what does it predict.Wow! Just did a quick look at momentum 1st 6 mos vs. 2nd 6 mos. 180% YTD means another +250% (give or take) over the next 6 months for . Anything substantially less would be a true anomaly. $50k entirely realistic under this model. I'm shocked. — Timothy Peterson, CFA CAIA (@nsquaredcrypto)
Does This Prediction Hold Its Water?
As you are likely aware of, May 2020 will see the next Bitcoin block reward reduction, during which the amount of BTC put into circulation around every 10 minutes is cut in half. While this may not sound notable, a model from analyst PlanB, also known as 100 Trillion Dollars, suggests that the so-called “halving” event will be a massive boon for the value of BTC. A boon that may give it the potential to move past $20,000 and beyond.As reported by NewsBTC previously, PlanB uses what is called the stock-to-flow (SF) ratio to back his target. For those unaware, the “stock” is the amount of said asset, usually a commodity, in circulation; the “flow” is basically the inflation rate, or how much of the commodity was added to the total stock in a year.
Right now, Bitcoin sports an SF ratio of 25, implying an inflation rate of 4% per annum. Gold has an SF ratio of just above 50, coming in at around 55. PlanB postulates that there is a correlation between the market capitalization of a scarce asset and its SF ratio.Related Reading: Analyst: Bitcoin May Consolidate for Several Months, But Six-Figure Price Surge is Still Imminent
With the halving, Bitcoin’s SF ratio will reach 50, meaning that it will near that of gold. If we follow the line of best fit for the model, it predicts that by May 2020, the “fair” stock to flow value for BTC will be around $55,000 per coin. While May 2020 is obviously not the end of 2019, some analysts expect for investors to “front run” this key event, which is something that should result in Bitcoin price appreciation towards $55,000.This isn’t the only model or indicator signaling that Bitcoin could soon hit $40,000. Per a recent CNBC interview with Fundstrat’s Tom Lee, Bitcoin will soon see fresh all-time highs. In that interview, Lee didn’t tip his hand as to why comes after “new all-time highs”, but speaking to Binance’s CFO, he did.
He stated that once $10,000 is breached, FOMO will result in a “fast and furious” move to $20,000, then a six-month appreciation to potentially $40,000.
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