In a recent interview, Trace Mayer, an Austrian economist, bitcoin expert and venture capitalist, has estimated that bitcoin price could reach $3,000 once the halving of bitcoin block rewards takes place next month.

Mayer has invested in a number of bitcoin companies including Armory, BitPay and Kraken and is a prominent figure in the cryptocurrency ecosystem. Among other things, he discussed the potential of bitcoin for countries that are facing massive currency problems such as Argentina, Venezuela and others.

When asked about the implication of block reward halving on bitcoin price, Mayer said that this is a “fascinating thing” that happens with bitcoin every four years, adding that it is impossible to price in the effect of this halving.

He went on to explain this phenomenon saying that two things need to be considered: the supply side, and the demand side. Since the total supply of bitcoin is fixed, so the major effect on bitcoin price will be coming from the demand component.

Trace further categorizes demand component into speculative demand and transactional demand, adding that the latter is becoming increasingly stable with more and more people using bitcoin. He noted that price is completely irrelevant when considering transactional demand.

He further emphasized that whenever there are “big shocks” to the transactional supply of bitcoin, there is usually a 2-3 month time period when the market has to readjust to the new equilibrium. Quoting example, he said that at the time of first halving, there was a 30x increase in bitcoin price and the Silk Road debacle saw a 20x increase in price.

“This time around, we’re looking at a 10x increase in price.  We’re looking at it going from $250 or $300 to $2500 or $3,000 per bitcoin,” he added.

However, he also stressed that bitcoin price could be affected by several factors, one of which includes the failure of a major exchange, The Merkle reported.

“Who knows what will happen. Maybe we have a failure of a major exchange and the price will tank again. Who knows what the future holds for us,” he concluded.

Last year, Daniel Masters, co-founder of Jersey-based Global Advisors' multi-million dollar bitcoin hedge fund, said that halving of mining reward could see the price of bitcoin test its 2013 highs of above $1,100 in 2016 and then pick up speed to rise to $4,400 by the end of 2017.