History teaches gold: Does Nakamoto effect ensure highest bitcoin rate ever?

Bitcoin is on the eve of a huge price rise. That was one of the topics in the latest episode of Crypto Trader, a CNBC show. Raz Gerber talks about the impact of the decreasing supply of new bitcoin in the coming years.

And spoiler: that is a very positive impact.

Bitcoin halving makes bitcoin scarcer than gold

Raz Gerber: “In May 2020, bitcoin will undergo a halving. The inflation rate of bitcoin then goes hand in hand with that of gold, which is now around 1.7 percent. Four years later, bitcoin becomes scarcer than gold. The inflation rate of bitcoin is then only 0.8 or 0.9 percent. “

After this, Gerber, working for data company Dremio, draws the comparison with gold. Before the 1970s, the value of the US dollar was still linked to gold:

“It is now 48 years since Nixon disconnected the dollar from the gold standard. This is also called the Nixon shock. If you look at the price of gold, you will see that it did not immediately rise after the Nixon shock. That took a while. But eight years later, gold went down more than sixteen times compared to the US dollar. “

“In the summer of” 71, gold was only worth $ 40. Today it is worth $ 1,500. Do the math. The US dollar has lost more than 95 percent in value compared to gold. “

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The Nakamoto shock is coming

According to Gerber, bitcoin will follow the same path in the future as gold in 1970. He compares the bitcoin block halving with the Nixon shock:

“I believe that the Nakamoto shock may come in the coming years. It will probably take another three or three years before we notice this. With bitcoin we have an asset that is becoming increasingly scarce, actually every ten minutes. And if that happens, then this Nakamoto shock can be the equivalent of the Nixon shock almost fifty years later. “

Plan B has the same view

Gerber’s view of the declining supply of bitcoin and the price development is similar to that of Plan B. That is a Twitterer who has applied the stock-to-flow ratio to bitcoin. The stock-to-flow model is generally used to predict the price of gold, and it fits very precisely on the bitcoin rate:

This is becoming scary: using Oct instead of Dec data, Stock-to-Flow model fit improves to 99.5% R2! Model error was mainly caused by Nov2013 and Dec2017 ATH, so sampling without ATH gives less noise. Predicted #bitcoin prices increase: $ 100K (2020+), $ 1M (2024+), $ 10M (2028+) … pic.twitter.com/1WX6LOVxZW

– PlanB (@ 100trillionUSD) July 14, 2019