If you bought Bitcoin in 2015 or 2016 when BTC was trading for less than $500 and HODL till today, the value of the assets would be around 1,750% higher. However, not many investors were lucky to purchase the cryptocurrency five years ago, partly because of the skepticism of its potential at that time.
Today, Bitcoin is trading slightly above $9,200, after being dubbed the best performing assets of the last decade. More people, both retail and institutional investors, are buying the digital asset for many reasons.
PlanB’s Reasons For Buying Bitcoin
One of those who bought BTC when the price was just several hundred dollars is PlanB, an analyst famed for creating Bitcoin’s Stock-to-Flow (S2F) price model.
Reminiscing his early days with Bitcoin, PlanB (@100trillionUSD) shared on Twitter four reasons that propelled him to buy Bitcoin in 2015/2016 long before he even created the S2F cross-asset model for the cryptocurrency.
According to the analyst, the first reason was the limited supply of Bitcoin. Only 21 million BTC will ever exist, but there are almost 47 million millionaires worldwide. Logically, this means that there are not enough whole bitcoins for every millionaire out there, let alone average investors.
Bitcoin On Mars?
Next, he considered the possibility of the human race colonizing space or other planets like Mars. If that happens, PlanB noted that people “can’t use gold or $ in space or Mars, need something else.” A better alternative here would mean something digital like Bitcoin.
It is common knowledge that a central government or entity does not control Bitcoin. An earlier report by CryptoPotato covered an anonymous mail that might have been written by young Satoshi Nakamoto, which gave the true definition of electronic cash (ecash) like Bitcoin.
The author of the mysterious post argued that “it would be a misuse of the word ‘ecash,’ if something that was revocable were dubbed ecash.”
He continued: “It is not technically possible to implement electronic cash at all without tamper-resistant hardware because reliance on a mint or double-spend database means your ‘cash’ can become worthless overnight if someone (say a government) decides to switch off a computer (the one holding the double spending database).”
This feature of Bitcoin is the third reason why PlanB said he purchased the cryptocurrency five years ago. “Nobody can freeze account or block transactions,” he said.
Bitcoin was born in a recession dating back to the financial crisis of 2007 – 2008. The S2F model creator stated that the fourth reason for his decision to buy Bitcoin is that even though BTC has a “0% interest rate, it is better than the negative interest rate” offered by banks during economic meltdowns.
Bitcoin At $300,000
PlanB’s Stock-to-Flow (S2F) price model for Bitcoin is particularly bullish on the cryptocurrency’s potential value. The model measures the price of BTC using the number of circulating coins and the issuance rate.
In simpler words, as Bitcoin production supply reduces every four years, the crypto asset becomes more scarce due to its limited supply, and that would force the price to increase exponentially.
Theoretically, PlanB’s Stock-to-Flow Cross-Asset model places BTC value at around $288,000 per coin or a market cap of $5.5 trillion by 2024, the year for Bitcoin’s fourth halving.