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Although PlanB reiterates his prediction for Bitcoin at $100k, the analyst warns that investors should not totally rely on the stock-to-flow model.
Quantitative analyst PlanB, has down on his prediction that Bitcoin will rise to $100k by the end of the year. The Bitcoin analyst stated this in a recent interview on the What Bitcoin Did podcast. During the discussion, he ascribed his unwavering confidence to the stock-to-flow model he popularized in the crypto space, adding that there’s time for Bitcoin to spike. According to the Dutch analyst:
“I never had any doubt. I still think it will be $100,000 end of year, minimum. And there’s lots of time. We’re at [$40,000] now. So that’s a 2.5x. We’ve done more in one or two months, historically. So, it can be done. I’m very confident…I still see people on the internet calling for $20,000 Bitcoin. I don’t think that’s going to happen…[$100,000] by Christmas.”
Typically used in valuing traditional assets, the stock-to-flow model operates under the assumption that scarcity drives value up. It aims to predict price by measuring the ratio of the current stock of a commodity to the flow of new production.
The current amount of Bitcoin in circulation is about 18.8 million, and an estimated 330,000 new Bitcoins add to that total number each year. Applying the S2F model to this scenario derives a stock-to-flow of 52 for Bitcoin.
PlanB Also Gives Disclaimer in His $100k Bitcoin Price Prediction
So far, the model seems to be on track to realize this prediction. However, PlanB is also quick to state that if and whenever the model falls off in its prediction, there will be tell-tale signs for investors. In his own words:
“The stock-to-flow model says we need to increase the stock-to-flow ratio, which has increased since the halving. So, we are waiting for that a little bit. But if it stays low – so if we stop at $30, 20, 40K for a few years, a few months – then obviously that linear regression line no longer fits the data.”
PlanB adds that telling when a form is invalid is easily done, and everyone can do it themselves. The disclaimer here is that the S2F, like any other financial model, is not invincible and should not be solely relied on. Interested persons may need to factor in other parameters, which may include other external factors. Such factors may include government intervention (through regulatory guidelines) and increased mainstream acceptance of crypto from businesses.
PlanB first started documenting the now popular stock-to-flow (S2F) price model back in March 2019. In that time, he has also updated the S2F price model to the stock-to-flow cross-asset (S2FX) model. The analyst believes the Bitcoin bull seen throughout much of March and April that culminated in a $64,000 peak on April 14 2021, is not over. As of press time, Bitcoin is back up to $47,228 after hitting a $30,000 low in July. It is worth noting that much of this growth occurred in the face of calls for increased government regulation in the digital finance space.
PlanB’s earlier predictions seem to be in line. Back in June, the analyst rightly predicted that Bitcoin would retest $47,000 this month. Based on this accuracy, the market may look forward to predictions for other months.
Other targets include a drop to $43,000 in September, before jumping to $63,000 in October. Other projections include $98,000 for November and $135,000 for December 2021.