The research division of German bank BayernLB has published a report that discusses the price of Bitcoin while taking into account the stock-to-flow model, which is particularly popular when evaluating the price of commodities such as precious metals.

Buy/Sell Bitcoin (BTC)

How to buy Bitcoin (BTC) on Binance?

BTC price could reach $90,000 after 2020 halving

The stock-to-flow ratio refers to the ratio between the amount of a commodity that is held in inventories and the amount of the commodity that is produced each year. A high stock-to-flow ratio is a common feature of both gold and Bitcoin, and this has served as one of the behind the narrative that Bitcoin will behave like “digital gold”.

With the next Bitcoin halving (expected for May 2020), BTC’s stock-to-flow ratio will come very close to that of gold, according to BayernLB’s estimates. The model used by the researchers implies a price of around $90,000 – it certainly remains to be seen if the model will be even close to accurate after the 2020 halving.

“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).”

With the 2024 halving, Bitcoin’s stock-to-flow ratio will surpass 100, which the researchers say will be higher than any commodity has had in human history. They conclude by saying that Bitcoin has been designed as “ultra-hard” money, which could turn out to be a very desirable quality: