The creator of the Stock-to-Flow (S2F) Bitcoin model states that it is high time for Bitcoin (BTC) to start its significant price rise.
S2F Bitcoin model was popularized by twitter-based bitcoin analyst, ‘PlanB,’ making it the leading valuation model for Bitcoin proponents. This model has since achieved a lot of popularity and inspired many investors and gamblers who dream of getting from rags to riches.
On september 14, PlanB in a tweet highlighted an increase in signs of BTC/USD repeating historical gains. He used a chart to explain that only BTC data had been used and it was the 2019 time series model. This would be to show the likelihood of the 2019 trend starting all over again.
S2F version 1 update. This is the 2019 time series model on historical BTC data only (no gold, silver, diamonds, real estate data used). You see the jump in model value at the halving (white line) and corresponding drop in S2F multiple / model error (white dots). Time to go up. pic.twitter.com/qIjiXfbmCx
— PlanB (@100trillionUSD) September 14, 2020
PlanB claims that there had been a jump in the model value after the halving and also a corresponding drop in S2F multiple/model error.
The Stock-to-Flow (S2F) Model
The S2F model compares Bitcoin to commodities such as gold, silver, diamonds, or platinum. The original S2F model is a formula that is based on monthly S2F and price data. The ratios of this model are used to evaluate the current stock of Bitcoin, the total amount currently available, against flow of new production, which is the amount of BTC mined in that year.
The original and recent Stock to flow chart are different, as the current incorporates macro factors and introduces phases in the evolution of Bitcoin as an asset. The current one, known as stock to flow cross asser (S2FX) proposes an average price for Bitcoin to get to $288000 before 2024.
Bitcoin to Repeat History?
After Bitcoin’s halving in May 2020, there have appeared ‘red dots’ on the model which have mimicked the happenings of Bitcoin price after the 2016 halving. PlanB also explains later that in the 2016-2017 period, the red dots had trouble crossing the $1000 level, while the $100 level in 2013.
PlanB engaged his followers often answering questions and offering explanations to his prediction on this trend. He stated that there would either be lengthening cycles or S2F model and not both. A question about the appearance of $200b in the market and where it possibly came from was among these numerous queries. PlanB explained that the money could be from silver and gold countries with negative interest rates, countries with predatory governments, billionaires and millionaires hedging against quantitative easing (QE), and institutional investors.
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