Bitcoin on Course to Hit $200K as Per Stock-to-Flow Model
Bitcoin (BTC) price rally is overshooting the well-known Stock-to-Flow (S2F) model, which forecasts $200,000 for Bitcoin. The S2F model predicts the long-term price target of Bitcoin by considering two crucial aspects, namely the quantity (stock) of Bitcoin currently existing and the quantum of freshly mined coins that enter the market (the flow).
As per the S2F multiple, the price of Bitcoin should be trading at about $36,851 for considering it on course to achieve the aforesaid target.
The latest bull cycle and underlying strong momentum has pushed the BTC/USD to $49,000, which is far higher than the S2F level for the current period.
Stock-to-Flow Multiple (463d)
2021-02-28, 23:59 UTC
ln(actual / model)
Actual price: $45,359.46
Model price: $36,851.01
S2F multiple: 0.21 pic.twitter.com/rGgfgNmS3C
— S2F Multiple (@s2fmultiple) March 1, 2021
Saifdean Ammous, the well-known author of the book, ‘The Bitcoin Standard’ stressed that Bitcoin has seldom moved away from the S2F model from the time it was created two years back. The remarkable precision of the S2F model as of date indicates that the market is acknowledging the value of Bitcoin on the basis of paucity and rising demand. Furthermore, it throws light on Bitcoin’s value hypothesis in comparison to the depreciating US dollar and the programmed curtailement of the flow in the form of Bitcoin halving event.
Ammous pointed out:
“PlanB released this model two years ago. Even after everything that has happened in bitcoin and the world over the last two years, the bitcoin market price has never diverged more than 1 standard deviation from the model’s predicted price.”
.@100trillionUSD released this model two years ago. Even after everything that has happened in bitcoin and the world over the last two years, the bitcoin market price has never diverged more than 1 standard deviation from the model’s predicted price. https://t.co/0eH09v2hg2
— Saifedean.com (@saifedean) March 2, 2021
S2F developer PlanB stated that he is almost sure that the price of Bitcoin would hit $100,00 by December 2021, as per the model.
🟠New orange dot: Feb close $45,240! (Jan was $33,141 and current price is $46,500) .. like clockwork🚀 pic.twitter.com/zcNuTVZQZx
— PlanB (@100trillionUSD) March 1, 2021
During mid-2020, PlanB stated that Bitcoin could hit a range of $100,000-$288,000 by December of 2022. He stated:
“People ask if I still believe in my model. To be clear: I have no doubt whatsoever that #bitcoin S2FX is correct and #bitcoin will tap $100K-288K before Dec2021. In fact I have new data that confirms the supply shortage is real. IMO 2021 will be spectacular. Not financial advice!”
As per Willy Woo, a notable on-chain analyst, the numero uno’s monetary velocity is greater than USD M1, implying that the king of crypto is transferring more value than the money utilized for spending with the greenback. The trend demonstrates the active manner in which Bitcoin is used as a mode of value transfer and a store of value at the same time, as it matures into a well-accepted growth. Woo stated:
Bitcoin’s monetary velocity is now higher than USD M1. M1 is the USD held in short term accounts for buying stuff; none of it is moving. BTC’s making a joke out of it.
BTC is moving more than the money we have for spending. Nevermind BTC is for long term investment. pic.twitter.com/ymZGOx3uRh
— Willy Woo (@woonomic) March 1, 2021
Presently, Bitcoin is regarded as a store of value and a method of hedging against inflation. When the prominent crypto’s level of adoption as a mode of payment and settlement increases, it would fuel the second wave of mainstream usage and also adoption.
During that instance, the value of Bitcoin could expedite again, trending along the track provided by the S2F model as the forthcoming block reward halving event in roughly three years happen, likely pushing the price of Bitcoin further upwards in line with the S2F curve.
Bitcoin, however, could record sharp price corrections as it had happened in the past rallies. Still, it will continue to move along the track denoted by the S2F model, provided there are no extra ordinary deviations.