Bitcoin’s inflation rate is lower than the central bank, will prices increase?

Currently, all eyes are on the upcoming Bitcoin halving in the hope that the Bitcoin price will increase sharply. It’s almost impossible to control psychology when prices collapse. Below are simple economic models and especially about Bitcoin’s inflation rate show that it could all change in six months.

Bitcoin’s inflation rate under 2%

The expected ‘Santa rally’ event does not seem to be enough every year as Bitcoin price continues to slide, market sentiment is declining. New options contracts from Bakkt and CME a month later did not raise prices as they provided institutional investors the possibility of further asset shortening.

And what can reverse this situation is Bitcoin halving by 2020. It is expected that the event will take place around May 15, after which the block reward will decrease from 12.5 to 6.25 BTC. The fewer Bitcoin generated each year will make the cryptocurrency more scarce.

Currently, there are about 295,000 BTC mined before Bitcoin halving. At the current price, this figure is equivalent to about $2.15 billion, about 1.6% of BTC market capitalization.

Another scenario is that Bitcoin’s inflation rate will fall below the inflation rate of central banks. Currently, Bitcoin’s inflation rate is 3.7% per year. After halving, this rate is expected to fall to 1.8%. At that time, Bitcoin’s inflation rate will be lower than the target rate of 2% set by the US Federal Reserve.

Bitcoin applies the Stock to Flow model

As AZCoin News reported, Stock to Flow model is defined as a relationship between production and current stock that is out there. After the halving, this will double, which is very important for investors in terms of unforgeable scarcity and an inability to inflate stock.

In less than six months, there may finally be a final discount of around $ 6.000 before any advance dynamics. Long-term charts for the next decade, including the other half by 2024, are all extremely optimistic regardless of what is happening today.

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