100trillionusd, the anonymous creator of the Bitcoin stock-to-flow model has provided new evidence to support the popular opinion that the price of Bitcoin will surge in the months after its historic third halving that is now less than three weeks away.
The latest research puts into perspective the amount of cash inflow that Bitcoin has needed to stay above the $7000 level since October 2017, the reward paid out to miners for verifying a block of transactions, and the total number of transactions added to the Bitcoin blockchain monthly.
To maintain $7000 since Oct 2017, #bitcoin must have had about $400M new cash inflow every month last 2.5 years! (30d x 24h x 6blocks x 12.5btc x $7k assuming all trading is zero sum game)
After the halving, we only need $200M per month to keep $7k level. If $400M stays, then ? pic.twitter.com/d6hYJqxIUr
— PlanB (@100trillionUSD) April 6, 2020
Per the study which also assumes that all Bitcoin trading is a zero-sum game, Bitcoin must have had about $400M new cash inflow every month last 2.5 years. While that figure may sound outrageous, Coinfomania once reported Coinbase CEO Brian Armstrong as confirming that institutions are investing $200M-$400M per week in cryptocurrency.
Therefore, with the upcoming Bitcoin halving set to reduce the number of issued bitcoins to 6.25BTC per block, only $200M of new BTC purchases will be needed to keep the price of the cryptocurrency above $7000.
Evidently, while the analysis by 100trillionusd is speculative, and would only hold if at least half of the current demand for BTC remains constant post-halving, it appears Bitcoin’s economic model which is primarily based on being deflationary.
Meanwhile, other factors such as the current global financial struggle instigated by the COVID-19 pandemic means it could take a longer time to build the buy wall needed to keep BTC above $7000 based on 100trillionusd’s analysis.
On the other hand, if the demand is sustained, then the price will definitely go north post-halving.