A state-backed German bank has predicted that Bitcoin will hit a price of $90,000 by May 2020, in anticipation of the “halvening” of new supply. 

In a research paper that cites Bitcoin Standard author Saifedean Ammous, German lender Bayern LB says the halvening, which will reduce the number of new bitcoins mined at a time from 12.5 to 6.25, will digitally expedite the process of inducing scarcity—the quality that made gold valuable over the course of many millennia. 

You can calculate the value of said scarcity by taking the current number of bitcoins in circulation (“stock”) and dividing it by the rate at which new bitcoins are produced (“flow”). The theory goes that the higher this “stock-flow” heuristic is, the “harder” and more suitable for a currency the money is. 

That’s because assets with low production relative to their supply run less risk of wanton inflation. Bitcoin’s case is unique, in that the asset is programmatically inhibited from increasing its supply—the bank speculates that a further bump to the stock-flow ratio from the halvening will increase the price. “Given that there are no other uses at all for bitcoins, no other demand-side developments (e.g. demand for gold in the spread of smartphones) can distort price formation,” Manuel Andersch, Senior FX Analyst at Bayern LB writes. 


This all leads to the bank’s conclusion: by the time of the halvening, Bitcoin’s stock-to-flow will spike from 25.8 to around 53. Whereafter, “a vertiginous price of around $90,000 emerges.” 

But bitcoin is on a downward trend, and this week has dwindled to $8,300. How could we be in the run-up to any “vertiginous” price swing? The bank suggests that Bitcoin doesn’t cleave to the “efficient market theory” of crypto markets, which holds that known future events are already factored into existing price (“priced in”). Instead, the events will generate gains as they happen. 

However, as the bank itself acknowledges, “even the best statistical model can fail miserably when attempting to predict the future.” Others have already failed in the attempt: excitement over Bitcoin fork Litecoin’s halvening earlier this year was dampened after the price slumped thereafter. The price had only increased in the lead-up to the halvening, before crashing. 

Nevertheless, Bayern’s conclusions suggest that Bitcoin’s in a unique position for a seismic spike.  “In 2024 (when the following halvening is due to take place), its degree of hardness will inexorably increase even further, to a level unprecedented in human history (a stock-to-flow ratio of more than 100!),” wrote Andersch.


“Nobody really knows what repercussions such a monetary standard would have,” he added. “Only one thing is clear: if Bitcoin is indeed to become the money of the 21st century, it will be because its properties (above all its high degree of hardness) have been preferred to those of alternative types of money—after all Bitcoin is a completely open monetary system operating on a purely voluntary basis.”

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