Cryptocurrency-focused research company, Digital Asset Research, has released a new bitcoin price prediction model based on scarcity—i.e. how few bitcoins there are left to be mined. The model estimates that Bitcoin's price could reach as high as $60,595 by May 2020, nearly six times its current value of $10,670. This would place Bitcoin's market capitalization at almost $1.25 trillion.
The prediction model is largely based on extrapolating Bitcoin's previous price performance—into the future. Another key factor the report says will determine price is Bitcoin's block reward halvings–the next of which is due in 2020. As the reward for mining blocks is cut in half, the price of Bitcoin is due to go up.
While the report assumes that history will repeat itself almost perfectly, it did provide an interesting insight into Bitcoin's behavior of the past few years. Digital Asset Research found that the Bitcoin price tends to peak about a third of the way through each halving reward cycle—each peak beating the previous. If this were to continue, this means that Bitcoin would find its eventual ceiling sometime in September 2021–surpassing the $60,595 number it quoted originally. The report however, didn't speculate on what that upper ceiling might be to bitcoin's price.
But obviously, this would require a large inflow of money—perhaps $1 trillion—to enter the market, to boost prices. Digital Asset Research speculates that it could come from investors looking to hedge against government currencies. This has been widely discussed in crypto media, with many suggesting that a U.S.-China trade war or further geopolitical tensions in Hong Kong could drive investors towards Bitcoin. However, as we saw recently, when the Dow Jones crashed—money came out of the market, showing that Bitcoin might be seen as a more risky, volatile asset rather than a safe haven.
The prediction model was generated using Bitcoin market data, with additional market insight borrowed from price analyst Plan B (@100trillionUSD on Twitter), who previously highlighted the link between Bitcoin's value and its scarcity. Digital Asset Research plans to revise the model as new information or market functions become apparent, to improve its accuracy over time.