Bitcoin prices have remained mostly range-bound for the past week straddling the $9,000 zone. With the halving less than one week away, the tension is mounting and traders are eagerly awaiting the next big move.
If history is to repeat itself, post-halving prices are not likely to rally until next year, as was the case in 2013 and 2017 following the first two halvings. This would align with predictions using the stock-to-flow (S2F) model, which has been uncannily accurate so far.
Bitcoin could hit $115,212 in Aug 2021 based on the change in the stock-to-flow ratio across each halving.
This wildly hopeful price prediction was backed up by a more in-depth analysis that delves deeper into the S2F model and Bitcoin’s monetary design.
There is the assumption that miners quickly sell their block rewards to cover their expenses, so when the reward gets cut in half next week it will have a huge impact on prices as it did previously.
The magnitude of the impact is proportional to the scale of the decrease in supply.
Morehead added that post-halving rallies have averaged 446 days from date of the halving to the peak of its respective bull cycle. In the current cycle, the market troughed for 514 days before the halving, so if history were to repeat itself, Bitcoin would yet again peak in August 2021.
Looking back to the S2F model again, the reduction in supply as a percentage of the total outstanding BTC has dropped from 15.3% after the first halving, to 2.2% at the next. Morehead added that the second halving decreased supply only one-third as much as the first, and it had exactly one-third the price impact.
Looking at previous rallies and supply reductions, Morehead concluded that the reduction in supply is only 40% greater than in 2016. Therefore, a 40% price increase would put BTC prices at a peak of $115,212 in August 2021 following a rally of 1,182%.
This assumes a starting price of just under $9,000, and more optimistically, that history will echo in a similar fashion that it has twice before.
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