There are 41 days left until the Bitcoin halving. Let’s revisit its impact

Although the "halving market" has become a luxury, the fact that Bitcoin is halving is still going on without any impact...

In six weeks (about 40 days), the number of bitcoins generated per block will drop to 6.25. This reward halving has long been expected to put upward pressure on prices. One analyst justified the significance of the halving by comparing it to other finite commodities and investments.

Bitcoin Compared to Precious Metals

PlanB, a well-known analyst on Twitter, tweeted a unique chart that looks at Bitcoin’s stock-to-flow ratio, a metric that compares available quantity to production rate, and is often used to describe or predict the production profitability of precious metals.

PlanB said that one month after the Bitcoin halving, miners’ Bitcoin output will drop from 1,800 per day to 800, and its scarcity (stock output) will increase from 27 years to 54 years.

This chart is related to an article written by PlanB last year, which stated that the current supply of Bitcoin is 25 (now 27). This means that at the current production rate, it will take 27 years to mine the existing number of Bitcoins. However, the halving will roughly double this number because production will be cut in half.

PlanB has demonstrated that over the past decade there has been a surprisingly clear correlation between Bitcoin’s market price and its stock-to-flow ratio.

He predicts that if this trend continues, the market value of Bitcoin will soon reach $1 trillion, with the corresponding price per Bitcoin becoming $55,000.

He said that Bitcoin is the world's first scarce digital currency object, as scarce as silver and gold, and can be sent through the Internet, broadcast or satellite, etc. Moreover, there is a statistically significant relationship between inventory and market value, and the relationship between inventory and market value is caused by chance.

Bitcoin development may change blockchain

In a sense, the analysis presented by PlanB is convincing. It reinforces the views of other analysts who have predicted a significant price increase due to the halving itself.

However, it is important to note that Bitcoin is still a work in progress, and in order to continue to maintain its value it must continue to achieve mass adoption and fend off competition from rival altcoins.

Importantly, the Lightning Network has yet to gain widespread traction and is still a work in progress. Second-layer scaling solutions are a critical part of Bitcoin’s future, and their development will have a significant impact on Bitcoin’s future usability.

Bitcoin therefore exists within the larger blockchain ecosystem. Although its hegemony in the market is currently unrivaled, it must continue to advance on a technological level to remain strong.

However, for now, some data suggests that Bitcoin will continue to be a solid investment and will continue to attract attention.

The original article comes from bitcoinist and was translated by the BluemountainLabs team. The English copyright belongs to the original author. Please contact the translator for Chinese reprint.