Contrary to what PlanB says, the Stock to Flow model actually says bitcoin will hit $100k by the end of 2021
By now you have likely heard about PlanB's Stock to Flow model.
He didn't invent it by any-means, but he has made it famous concerning bitcoin.
He took similar inputs to what people use to value precious metals and used them for bitcoin.
Specifically, it's calculated by dividing the existing supply of a commodity by that commodity’s annual production growth. Commodities with high stock-to-flow ratios such as bitcoin, gold, and silver have historically been utilized as stores of value.
The result has been a stock to flow model that has been remarkable accurate to date and has explained the vast majority of bitcoin's moves since bitcoin was created.
However, PlanB is wrong about one thing...
If you have followed PlanB for any length of time on crypto news outlets or on Twitter you will likely know that his latest model shows that bitcoin will hit $100k before the next halving.
The model looks something like this:
This is where he's technically right but also technically wrong at the same time.
If you look at the previous patterns, bitcoin tends to peak 12-18 months post halvings.
And the last bitcoin halving was in early May of this year.
Which means the next peak should be somewhere between May and December of next year.
PlanB loves to say $100k by 2024, but in all reality he should be saying something like $100k by 2022 if these past patterns and cycles continue to play out.
It's pretty clear that he is only saying 2024 to give himself some wiggle room just in case it doesn't play out like it has in the past.
Either way though, I think people will be pretty happy if it hits $100k by 2022 or by 2024.
Stay informed my friends.
-Doc
Posted Using LeoFinance
As much as I believe bitcoin will appreciate significantly in value, I am a bit skeptical of the S2F model. It’s critics have a good point that as you go out farther it predicts increasingly ridiculous bitcoin prices which means that at some point the model will break down. There is no way to know when it will break down, and it could very well be now/this cycle. The model works until it doesn’t.
thanks for your very interesting opinion, I appreciate it.... and thanks and thanks for inventing Splinterlands.
Yep I agree. Eventually the stock to flow model will most likely stop working due to the 'law of large numbers' getting in the way. The only question will be is it this current cycle, the next one, or the one after that? A lot of things point towards that $100k number though besides just the stock to flow model, which is why I don't think this will be the time it stops working out...
He said this himself also: S2F may work for one, maybe two more cycles as indeed, the targets start to get ridiculous after that. Nonetheless, he did revise his S2F model into a S2F cross asset model with even more mind-blowing targets.
https://digitalik.net/btc/s2fx
One serious law (edit- flaw! not 'law' lol) in this.
The dollar was valued against metals (gold ).
The metal was the foundation.
Bitcoin is valued against a fiat currency....erm...
Metals have intrinsic value.
Fiat money doesn't.
Neither does bitcoin. (cost of production is not intrinsic value).
The intrinsic value of gold is fractions of what it is valued at. The vast majority of gold's value is due to its store of value and speculative properties.
I believe we can say that Bitcoin is a store of value.
I do not feel the stock market will make it that long.
So the fundamentals this analysis is based upon are about to fall out.
But, of course, if the Fed can keep the dollar together, and we don't have a banking collapse, and we don't have stock exchanges closed (because mass fraud becomes apparent) then we will see this 100k in a year.
My bet is that we don't have that much time to wait.
We will see 100k by the end of this year.
I'd take that bet if you are offering it? :)
The stock-to-flow model has been pretty accurate so far, but I wouldn't mind if the price had deviated a bit for the better. I'd be ecstatic if Bitcoin could get to $100,000 by the end of next year, although it'll take quite a rally to get there. For now, it looks like BTC's price is standing on very fragile ground. That CME gap at $9,700 might just get filled after all...
Hopefully not. But it's one of the few around the current trading range that is yet to be filled. And you know how the price just loves to fill those gaps...
Yeah, I feel like one could trade Bitcoin using nothing but CME Futures gap as an indicator. Seeing how we've been seeing such low volatility, and a seemingly weak price action, it might just swing by to fill that gap. At least once it does that, we know that it can't get any lower. I'll be happy to be wrong on this one though 😖
It's certainly looking that way at the moment isn't it... The momentum is gone, perhaps a gap fill is our next move.
Aye, but there was a slight pump and dump following FED Powell's speech. I genuinely have no idea of where Bitcoin's going to go next, now. It looks like there's some renewed momentum to push it up, but will it be enough to overcome the pullback? It could go either way now 🙃