The price of bitcoin has been heading south over the past three months, but one quant analyst that goes by the name of PlanB on Medium predicts that the flagship cryptocurrency could surge in the coming days.
Bitcoin halving will send the price soaring
PlanB’s price model is based on the scarcity of the cryptocurrency. The analyst predicts that bitcoin will hit a market capitalization of $1 trillion after the next halving event occurs in May 2020, giving each token a valuation of $55,000.
As things stand, 18 million tokens have already been mined. This means that there are only 3 million bitcoin tokens remaining for mining. Adding to the scarcity is the belief that somewhere between 14% and 19% of all bitcoin mined has been lost or stolen.
Assuming that 15% of the 21 tokens that have been mined are compromised, only 18 million tokens of the cryptocurrency will be left in circulation. Dividing $1 trillion by this number gives us a price of $55,555, which is close to what PlanB is modeling.
So, in just over seven months, the price of bitcoin could multiply seven-fold if the theory of scarcity holds true. But what has led PlanB to estimate that bitcoin could hit $1 trillion in market cap? The analyst says that bitcoin is the “first scarce digital object,” so it is akin to silver and gold.
This is why PlanB believes that people will shift their money from gold and silver to bitcoin. What’s more, PlanB adds that people in nations with negative interest rates or “predatory governments” will buy more of bitcoin in the future.
All of this will lead to increased demand for bitcoin and send the price of the cryptocurrency soaring.