The developer of the stock-to-flow (S2F) asset price analysis system, PlanB, has stressed once again that Bitcoin (BTC) is on course to reach $100,000. The unidentified analyst anticipates the king of crypto to reach the $100,000 to $288,000 range by December next year.
Bitcoin would have to gain by roughly 545% from the prevailing price to breach $100,000. At that price level, the market cap of Bitcoin would be almost $2 trillion, matching the market cap of world’s largest tech company Apple.
The S2F model endeavors to forecast the long-term price direction of Bitcoin by assessing its supply. In particular, the model looks at the pre-determined supply and block reward halving, which trims the rate at which fresh Bitcoin is generated or “mined.”
The S2F model is based on the premise that inflation would continue to increase while the Bitcoin supply decreases over time. These two arguments could provide the necessary boost to the crypto’s price.
On the basis of Bitcoin’s halving cycles and supply curve, S2F computes the likely valuation of Bitcoin to be $5.50 trillion. The model forecasts multi-trillion-dollar valuation for Bitcoin before the end of 2024. As per the model:
“S2FX model estimates a market value of the next BTC phase/cluster (BTC S2F will be 56 in 2020–2024) of $5.5T. This translates into a BTC price (given 19M BTC in 2020–2024) of $288K.”
Through a tweet, PlanB stated that he is convinced that the S2F model’s $100,000 price forecast for Bitcoin would happen. The coming year is very crucial for Bitcoin because of the block reward halving event that happened in earlier in May.
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! pic.twitter.com/GNSxLIt7NG
— PlanB (@100trillionUSD) November 8, 2020
Six months back, Bitcoin underwent its third halving, an event which happens once in four years. The event reduced the quantum of Bitcoin that can be mined every day by 50%, implying a likely drop in circulation in the months and years ahead. The analysts detailed as follows:
“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!”
So far this year, Bitcoin, following the halving event, has rallied to $15,500, from $8,700, reflecting a 78.1% surge in six months. On-chain analysts such Willy Woo, creator of Woobull.com, has stated that the total supply of Bitcoin would be below than what he had assumed.
While the total supply of Bitcoin remains fixed at 21 million, there is a higher quantity of Bitcoin that had been lost or remains inaccessible. Woo said:
“Total supply of Bitcoin will not be 21m, it’ll be around 17m as many coins died in the fight for being acknowledged as something valuable in the early days. This means 0.002 BTC per person on the planet.”
Total supply of Bitcoin will not be 21m, it’ll be around 17m as many coins died in the fight for being acknowledged as something valuable in the early days.
This means 0.002 BTC per person on the planet.
— Willy Woo (@woonomic) October 28, 2020
In essence, PlanB anticipates Bitcoin’s price to move in line with the forecasts made using S2F model as the liquidity and fresh Bitcoin mined will decline over time.
