In a shocking turn of events, Bitcoin has surged beyond $76,000 following the announcement of Donald Trump’s victory in the United States presidential election on November 5. This sudden price increase has left many wondering what factors contributed to this significant jump.

PlanB’s Stock-to-Flow Model Projects $500,000 Price Target for Bitcoin

One analyst who has been closely watching Bitcoin’s performance is PlanB, a renowned expert in the field of cryptocurrency analysis. According to his stock-to-flow model, which assesses Bitcoin’s value based on its limited supply and scheduled halvings, the price target for Bitcoin could reach as high as $500,000 within the next four-year cycle.

PlanB attributes this potential price increase to Trump’s proposal to create a national Bitcoin reserve, which could lead to an additional 200,000 Bitcoins being added to the market each year. This, in turn, would put upward pressure on the price of Bitcoin.

"If history is any guide, if the stock-to-flow model is any guide, then we’ll see sharp price increases from here," PlanB said in a recent statement.

Stock-to-Flow Model Price Targets

The stock-to-flow model has been widely used by cryptocurrency analysts to predict Bitcoin’s price performance. The model suggests that after each halving event, the price of Bitcoin tends to increase significantly.

While PlanB’s projection of $500,000 may seem ambitious, it is not without its limitations. According to the analyst, there is a wide variance between this target and other possible prices, ranging from $250,000 to $1,000,000 per Bitcoin.

Institutional Demand and Government Interest

The new Trump administration’s interest in creating a national Bitcoin reserve has sparked renewed enthusiasm among investors. Senator Cynthia Lummis, a prominent figure in the US government, has been pushing for the creation of such a reserve, similar to the gold reserve held by the Federal Reserve.

Furthermore, the new administration may issue an executive order to allocate federal funds for Bitcoin acquisition, potentially establishing a new reserve standard.

Firms like MicroStrategy have also announced substantial plans to acquire large amounts of Bitcoin. CEO Michael Saylor has committed to purchasing 200,000 Bitcoins per year over the next three years.

‘Spoof City’ Sours BTC Gains

However, not all is well in the world of cryptocurrency trading. Popular trader Skew raised concerns about a deceptive order book practice called ‘spoofing,’ which involves large bands of liquidity being placed at price points that are then thinned out or removed entirely after price reactions.

This tactic, banned on legacy markets, has been prevalent in crypto trading and may have contributed to the recent price volatility. Skew suspects that spoofing may be responsible for the sudden thinning out of liquidity following the $77,270 Bitcoin high seen on Bitstamp.

Other commentators and traders echoed these concerns, noting that despite massive inflows and a potential long squeeze, BTC’s historically aggressive upward trajectory is nowhere to be seen.

Real-Life Yield Farming: How Tokenization is Transforming Lives in Africa

In other news, tokenization has been transforming lives in Africa by providing access to financial services for underserved communities. Real-life yield farming, which involves the use of blockchain technology to create new economic opportunities, has been gaining traction in countries such as Kenya and South Africa.

This innovative approach to finance has the potential to disrupt traditional banking systems and provide a more inclusive and accessible means of accessing capital.

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Conclusion

The recent surge in Bitcoin’s price has left many wondering what factors contributed to this significant jump. PlanB’s stock-to-flow model projects a $500,000 price target for Bitcoin within the next four-year cycle, citing Trump’s proposal to create a national Bitcoin reserve as a potential driver of demand.

While institutional demand and government interest are on the rise, concerns about spoofing in crypto trading markets may have contributed to recent price volatility. As always, stay informed with our Law Decoded newsletter to stay ahead of the curve in the world of cryptocurrency.