Bitcoin halving has not yet been priced, says Transfero Swiss AG’s head of Research and Portfolio Management, in an article published in Cointelegraph. Expected to occur on Monday (11/5), the cut in the issuance of new bitcoins is long awaited by the market.
“As it is an unusual asset in the market, several pricing models have been created to analyze the fair price of the bitcoin. One of them is Stock-to-Flow, also used to forecast the price of precious metals such as gold, and other scarce commodities. If we take into account that the marginal supply of bitcoins will fall and the demand continues to follow a growing curve, the trend is for the price to rise, a natural consequence of the law of supply and dema”, says the executive.
He claims that the price of the bitcoin behaves differently from the price of a stock. In the latter, the fair price of the asset is calculated according to future cash flow expectations brought to present value by traditional valuation models. Bitcoin, on the other hand, is more like a commodity and therefore is priced according to the supply and demand. He compares the asset to the French bread market. “If you know you’re going to have a shortage of bread, some bakeries may even speculate on the price, but only when bread production actually halves will the price go up”, he exemplifies
If you know you’re going to have a shortage of bread, some bakeries may even speculate on the price, but only when bread production actually halves will the price go up.
Bitcoin halving is one of the pillars of Transfero’s thesis that digital assets will be the best performing in this biennium.