The crypto bull run may just be getting started, with one expert giving credence to a forecast that predicts Bitcoin hitting $US288,000 ($370,000) by year-end.

Julian Kwan is chief executive and co-founder of InvestaX, a Singapore-based platform for Digital Securities Offerings, a new method of raising funds using blockchain technology. He’s also a “massive bull” – his words, not ours.

“The best way to look at this is, there’s a parallel financial universe being built, and the genie’s out of the bottle,” Kwan told Stockhead last week.

Decentralised finance is bringing capital market activities such as lending and borrowing to cryptocurrency holders, so they can do something more than “just buy Bitcoin and sit on it,” Kwan notes.

“That’s really exciting – now we’ve got lending, we’ve got borrowing, we’ve got securitisation.

“And that’s creating a whole new wave of products, which is super crazy, interesting and exciting stuff as well.

“So I think that overall, it’s extremely bullish.

“It’s hard to find a sign that is anything other than, for at least the rest of the year, the price is going to melt up.”

$288,000 BTC in 2021

Kwon notes a forecast released by “Plan B,” an anonymous but revered cryptocurrency analyst from the Netherlands with 330,000 followers.

Based on his “stock to flow” model, Plan B predicted in April 2020 that Bitcoin will average $US288,000 ($370,000) this four-year cycle — meaning it will have to hit it by about December.

The all-time high will be even higher, Plan B said last week: Two or three times as high.

(We’ll save you the math: That would be $US576,000 to $US864,000, or $743,000 to $1.1 million in Australian currency.)

Stock to Flow model

Plan B’s Stock to Flow model is based on the idea that the value of Bitcoin runs in four-year cycles, coinciding with the “halvings” that cut the block rewards to Bitcoin miners.

It’s a bit complicated, but on 11 May 2020, the Bitcoin network went through its third “halving,” cutting by 50 per cent the rewards that are dispensed to the Bitcoin “miners” around the world.

They are expending vast amounts of electricity to solve mathematical problems as part of Bitcoin’s Proof of Work protocol, a process that works to secure the decentralised crypto network from attack and dishonest actors.

The miners are now being rewarded with 6.25 Bitcoins about every 10 minutes. In 2024, that reward will halve again, to 3.125 Bitcoins. By around 2140, the halvings will cease and all 21 million Bitcoins will have been mined.

Plan B’s hypothesis is that scarcity “directly drives value” — so that as the production of new Bitcoins halve every four years, that drives up their price.

Writing in March 2019, when Bitcoin was languishing at around $US4,000 ($5,100) in the midst of a brutal “crypto winter”, Plan B made a bold forecast.

“The predicted market value for bitcoin after May 2020 halving is $1trn, which translates in a bitcoin price of $55,000. That is quite spectacular. I guess time will tell and we will probably know one or two years after the halving, in 2020 or 2021. A great out of sample test of this hypothesis and model.”

On Friday, Bitcoin was trading for $US58,350, giving it a market capitalisation of $US1.09 trillion.

‘I’m a massive bull, obviously’

Kwan gives a lot of credit to Plan B’s prediction.

“So Plan B, he’s obviously an interesting guy. He’s clearly very smart, a very smart economist… he doesn’t reveal his true name, but he sounds like an old banker.”

Plan B’s model has “been pretty much right since the birth of Bitcoin,” Kwan said. “So yeah, I’m a massive bull, obviously.”

“I think you now have too many participants, too many smart, interesting, cashed-up people, who are building new infrastructure, and new products, than the old capital markets.

“And every single bank, whether they hate Bitcoin or not, is now trying to sell it.

“JP Morgan, the Bitcoin haters, the Citibanks, they’ve got more payments on blockchain and central bank currencies than anybody knows about. The usual suspects are making a lot of money.”

The views, information, or opinions expressed in the interview in this article are solely those of the interviewee and do not represent the views of Stockhead.

Stockhead has not provided, endorsed or otherwise assumed responsibility for any financial product advice contained in this article.