Will Bitcoin halving have a significant impact on the crypto space? Analyst Plan B says

In six weeks, the number of BTC generated per block on the Bitcoin blockchain will be reduced to 6.25. It has long been believed that the block reward halving can drive Bitcoin prices higher. One crypto analyst elaborated on the importance of Bitcoin halving by comparing it to some other commodities.

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Bitcoin vs. Precious Metals

Analyst PlanB tweeted a unique chart of Bitcoin's stock-to-flow ratio. This ratio is an indicator of the available quantity of a commodity and the speed of production. It is often used to predict the production profitability of precious metals. PlanB wrote:

One month later, the Bitcoin reward will be halved. At that time: 1) Miner rewards will be halved from 1800 BTC/day to 900 BTC/day. 2) Scarcity (stock-to-circulation ratio) will double from 27 to 54.

This chart matches an article PlanB wrote last year. The author noted that Bitcoin's current stock-to-flow ratio is 25 (now 27). This means that at the current production rate, it would take 27 years to mine the current amount of Bitcoin. However, due to the halving, this number will about double.

PlanB demonstrated that over the past 10 years, there has been a very clear correlation between Bitcoin’s market price and its stock-to-flow ratio. He predicted that if this trend continues, the market capitalization of the leading cryptocurrency may soon reach $1 trillion, or $55,000 per coin. He said:

“Bitcoin is the world’s first scarce digital asset. It is as scarce as gold and silver and can be sent via the Internet, radio, satellite, etc. There is a statistically significant relationship between the stock-to-flow ratio and market capitalization. The probability that this relationship is caused by chance is close to zero.”

The development of Bitcoin is crucial to the blockchain field

PlanB’s analysis is compelling. It further confirms the views of other analysts who have predicted that the price of Bitcoin will surge significantly due to the halving. However, it is worth noting that Bitcoin is still a work in progress. In order to continue to maintain its value, it must continue to gain widespread adoption to fight off challenges from other competing coins.

Additionally, and importantly, the Lightning Network is still under development and has yet to gain significant traction. This second-layer scaling solution is a critical piece of the Bitcoin future and its development will have a significant impact on Bitcoin’s future usability.

Therefore, Bitcoin is part of a larger blockchain ecosystem. While its current dominance in the field cannot be shaken, it must continue to make progress on a technological level to remain strong. However, current data still shows that Bitcoin is still a solid investment for the future.

Link to this article: https://www.8btc.com/article/577524
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