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Why The Bitcoin Stock-to-Flow Model Is Not Useful
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Bitcoin fails ‘worst-case scenario’ monthly close for the first time, starts December sub-$57K
Bitcoin (BTC) has failed to hit the November closing price demanded by one of its best-known models — but its creator is not giving up.
In a Twitter post on Dec. 1, PlanB said that he would give his floor model one more month to prove itself.
BTC floor model on probation
BTC/USD should have rounded out November in a “worst case scenario” of $98,000, but a combination of factors conspired to produce a much lower monthly close.
At close to $57,000, the pair firmly missed its target, this translating to the first such failure of PlanB’s floor model in Bitcoin’s history.
“Floor model first miss (after nailing Aug,Sep,Oct),” he wrote.
“No model is perfect, but this is a big miss and the first in 10y! Outlier/black swan? I will give Floor model 1 more month.”
$98K❌
Floor model first miss (after nailing Aug,Sep,Oct). No model is perfect, but this is a big miss and the first in 10y! Outlier/black swan? I will give Floor model 1 more month.
S2F model unaffected and on track to $100K.
Watch out for trolls confusing Floor and S2F model! https://t.co/tj6SSwSzKR
— PlanB (@100trillionUSD) December 1, 2021
Most recently, the floor model correctly predicted the monthly closes for August, September and October, adding to hopes that six figures could enter in December.
As more traders and analysts accept the fact that the 2021 bull market may take longer than anticipated to reach its peak, PlanB reiterated that his other BTC price forecasting models remain intact.
Among them are the popular stock-to-flow-based tools, these calling for at least $100,000 as an average price between now and 2024. The expectation is still that Bitcoin will attract a six-figure price tag before the end of this year.
Unfortunate bull timing?
November’s close coincided with fresh downside pressure on Bitcoin.
Related: Bitcoin correction weakest of 2021 so far as hopes of Santa Claus rally rise
Panic over Coronavirus combined with Federal Reserve Chair Jerome Powell admitting that inflation will not be “transitory” in nature.
Sentiment likewise took a hit, dropping from “neutral” to “fear” as per the Crypto Fear & Greed Index.
PlanB’s floor model meanwhile has its work cut out in order to remain a valid price guide — in just four weeks’ time, it predicts a BTC/USD price of $135,000.
Bitcoin to hit $250K in January 2022 but ‘invalidate’ S2FX BTC price model — New prediction
Bitcoin (BTC) will invalidate one of its best-known price models this cycle as $1 million becomes a focus for 2025, says well-known analyst Matthew Hyland.
In a series of tweets on Nov. 9, Hyland, who has created a loyal following for his Bitcoin commentary over the years, predicted that only one of the two stock-to-flow models would survive beyond 2022.
Bye bye, $288,000 stock-to-flow target?
With $100,000 still a lofty yet plausible end-of-year price for 2021, attention is turning to what could lie beyond.
For Hyland, new large-volume investors will play a key role in how BTC price action unfolds during the current halving cycle, set to end in 2024.
A mass publicity campaign from these large players, he says, will lure in retail investors — and it will start as soon as $100,000 hits, validating the stock-to-flow (S2F) model created by quant analyst PlanB.
“I believe the S2X model will be the catalyst for the late stages of the euphoric run because when PlanB is proven correct about the S2F model ($100k) then many will believe the S2X model ($288k) will be proven correct too,” he explained.
Thereafter, the stock-to-flow cross-asset (S2FX) model, which calls for an average price of $288,000 this cycle, will form a beacon of hope for hodlers — but BTC/USD will ultimately fail to get there.
“I believe this will be a ‘sell the news’ event, however it will be pushed by the larger players onto the public to provide enough liquidity in order for the large players to sell at the higher prices they want,” he continued.
“$288k will be the target price, it will fall short at $250k.”
With S2FX effectively “invalidated,” the campaign will not stop, however; for 2025, the year after the start of the next halving cycle ostensibly due to see a fresh parabolic run, it will be the $1 million per bitcoin narrative that replicates 2022.
“The S2X ($288k) model will be invalidated but the S2F ($100k) model will remain intact which predicts Bitcoin will reach $1 million dollars by 2025,” Hyland wrote.
“This will also be used by the large players in the years to come!”
$1 million BTC by 2031? “For sure,” says Bobby Lee
Hyland ended by reiterating a January 2022 price prediction, which at current levels seems impossible to comprehend: Bitcoin hitting a quarter of a million dollars.
Related: Bitcoin has further to fall before BTC attacks $70K, says trader
Others are already looking even further than the current cycle, too.
Bobby Lee, former CEO of exchange BTCC and now creator of Bitcoin wallet service Ballet, hinted that the $1 million Bitcoin price is all but guaranteed by the 2030s.
“In 10 years, by end of 2031, Bitcoin will go through another 3 block reward halvings. This will bring the block reward down to just 0.78 BTC each, for a total daily new issuance of just 112.5 BTC. It’ll be very scarce. Hang on and HODL!” he wrote Wednesday.
“By then, million-dollar bitcoin for sure!”
As Cointelegraph reported, by that point, it may even be impractical to measure Bitcoin’s value in fiat currency at all.
New ATH renews faith in PlanB’s prediction of $98K BTC by December
Bitcoin (BTC) has broken into new all-time highs, with the asset last changing hands in the mid $67,000-range.
During the final hour of Nov. 8 UTC time, BTC pushed into uncharted prices, with bulls firmly taking control of the markets as price action retested Oct. 20’s previous high of roughly $67,000.
The milestone comes on a historic date for Bitcoin, with analysts noting that Bitcoin’s market cap pushed above $1 million for the first time on Nov. 8, 2010.
Crypto Twitter appears to be rejoicing over the new all-time high, with many onlookers appearing to read the price-high as restoring their faith in the Stock-to-Flow (S2F) model from the pseudonymous analyst “PlanB” — which has gained significant popularity due to its eerie accuracy in predicting monthly closing prices for BTC.
The model measures the outstanding reserves of a given asset divided by its rate of annual production. PlanB first published their S2F model in March 2019 in a bid to quantify, measure, and predict the scarcity of Bitcoins, then estimating that Bitcoin would reach a market cap of $1 trillion after the May 2020 halving.
Using S2F, PlanB predicted with startling accuracy that Bitcoin would close August near $47,000 and end September near $43,000, while over-estimating October’s closing price by just 3%.
Looking ahead, S2F suggests that Bitcoin will close November above $98,000 and tag $135,000 by the end of the year, with many punters basing predictions that Bitcoin will trade in the six-figure price range before 2022 on PlanB’s outlook for the markets.
Related: Bitcoin hodlers ‘only halfway’ to selling BTC after new $500K price prediction
PlanB also pioneered the Stock-to-Flow Cross-Asset (S2FX) model in April 2020, which seeks to predict how the BTC markets may respond to changes in S2F dynamics based on how gold and silver have performed historically.
Using the S2FX model, PlanB has speculated that this bull cycle could see Bitcoin trade for $288,000 next year, with the analyst stating the markets will need to see “some real fireworks in 2022” for the projection to play out.
As you know S2F model predicts $100K average for this halving period (and based on floor model we reach $100K this yr). But S2FX model predicts $288K average this cycle (we need some real fireworks in 2022 for that). Let’s see where this 2nd leg of the bull market will take us pic.twitter.com/ttiNT5yMKe
— PlanB (@100trillionUSD) November 8, 2021
A recent Twitter poll from PlanB found that of 242,000 respondents, 39.8% believe Bitcoin will top out above $100,000 by Christmas, while 31.4% expect BTC to be trading for $288,000, and 23.8% anticipate the markets will fail to break above six-figures by Dec. 25.
Stock-To-Flow Targets $98,000 Bitcoin By End Of November, Will It Actualize?
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Bitcoin bull market ‘2nd leg has started,’ says BTC price model creator
Bitcoin (BTC) marking a new high of $67,000 last week has opened the possibility of hitting $100,000 by the end of this year.
PlanB, creator of the popular Bitcoin Stock-to-Flow (S2F) model, called Bitcoin’s price retracement from the $60,000-level the “2nd leg” of what appeared like a long-term bull market.
#bitcoin bull market, 2nd leg has started pic.twitter.com/N9H2QF7SDe
— PlanB (@100trillionUSD) October 26, 2021
In doing so, the pseudonymous analyst cited S2F, which anticipates Bitcoin to continue its leg higher and reach $100,000 to $135,000 by the end of the year.
The price projection model insists that Bitcoin’s value will keep on growing until at least $288,000 per token due to the “halving,” an event that takes place every four years and reduces BTC’s issuance rate by half against its 21 million supply cap.
Notably, Bitcoin has undergone three halvings so far: in 2012, 2016 and 2020.
Each event decreased the cryptocurrency’s new supply rate by 50%, which was followed by notable increases in BTC price. For instance, the first two halvings prompted BTC price to rise by over 10,000% and 2,960%, respectively.
The third halving caused the price to jump from $8,787 to as high as $66,999, a 667.50% increase. So far, S2F has been largely accurate in predicting Bitcoin’s price trajectory, as shown in the chart below, leaving bulls with higher hopes that Bitcoin’s post-halving rally will have its price cross the $100,000 mark.
PlanB noted earlier this year that Bitcoin will reach $98,000 by November and $135,000 by December, adding that the only thing that would stop the cryptocurrency from hitting a six-digit value is “a black swan event” that the market has not seen in the last decade.
An 80% crash later
Despite the high price projections, Bitcoin can still see big corrections in the future. PlanB thinks the next crash could wipe at least 80% off Bitcoin’s market capitalization, based on the same S2F model.
Related: COVID-19 vaccine will spark Bitcoin ‘crash’ — Rich Dad Poor Dad author
“Everybody hopes for the supercycle or the ‘hyperbitcoinization’ to start right now and that we do not have a big crash after next all-time highs,” the analyst told the Unchained podcast, adding.
“As much as I would hope that were true, that we don’t see that crash anymore, I think we will. […] I think we’ll be managed by greed right now and fear later on and see another minus 80% after we top out at a couple hundred thousand dollars.”
But not everyone thinks the next correction will be as dramatic as the previous ones. Dan Morehead, CEO of Pantera Capital, said in mid-October that the next Bitcoin price drop will be less than 80%, citing a consistent drop in selling sentiment after each halving cycle.
Last week, Bitcoin established a new record high at around $67,000 following a 53% rally in October so far. But the new highs prompted profit-taking among traders, resulting in retests of the $60,000 support level.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
Analyst nails Bitcoin monthly close 2 months running — his October target is $63K
Bitcoin (BTC) was keen to retain $44,000 on Oct. 1 as the monthly close sparked a late show of strength.
BTC monthly close matches PlanB prediction
Data from Cointelegraph Markets Pro and TradingView followed BTC/USD as it first returned to the $44,000 mark Thursday, then test lower levels before heading even higher.
While still not tackling resistance at $45,000 and higher, Bitcoin did not disappoint with its end-of-month performance, this almost exactly matching predictions from stock-to-flow model creator PlanB for a second month running.
Aug>47k✅
Sep>43k✅
Next targets: Oct>63k, Nov>98k, Dec>135k pic.twitter.com/C45nfQkQSC
— PlanB (@100trillionUSD) October 1, 2021
With $63,000 now planned for October, expectations were high for Bitcoin to make up for lost ground going into Q4.
“September was bad. October is great. November is great. December is great,” Cointelegraph contributor Michaël van de Poppe summarized, telling Twitter followers to “buy the f*cking dip.”
Van de Poppe highlighted historical performance across various months each year, something which Cointelegraph previously noted all but consigned September to be a “boring” 30 days.
Others, however, were more cautious. In its latest market update, crypto trading firm QCP Capital said that it would remain cautious in its approach to the market as a whole.
“Overall, we struggle to find any directional conviction amidst the macro and market crosswinds. Our strategy going into Q4 is to remain fairly neutral and nimble,” executives summarized.
Macro factors at play were China’s reiteration of its crypto crackdown and two United States issues: legislation and the potential approval of a Bitcoin exchange-traded fund (ETF).
On Friday, a vote on the government’s infrastructure bill, originally slated to happen Monday, was again delayed after a shutdown later this month was averted in a separate vote.
Ethereum returns to $3,000
Altcoins meanwhile saw another 24 hours of modest to flat moves, again headed by Binance Coin (BNB) on 6% daily gains.
Related: Bitcoin ‘FOMO rally’ long overdue that could see BTC price top $200K — Bobby Lee
All of the top ten cryptocurrencies by market cap were in the green at the time of writing, however, marking a refreshing contrast to recent action.
Ether (
Bitcoin could hit $30K or $100K this year as analyst warns ‘next months are key’
Bitcoin (BTC) could surge to $100,000 or bottom out at $30,000 by Christmas — but one of its best-known analysts is betting on the moon.
In a Twitter update on Aug. 26, PlanB, creator of the stock-to-flow family of BTC price models, cast fresh doubt on a Bitcoin bear move.
PlanB focuses on “key” remaining months
With BTC/USD trading at $47,000 this week, PlanB has a lot to be confident about.
His recent prediction of a minimum monthly close for August exactly matches current prices — and if the remaining four are just as accurate, Bitcoin could end 2021 at $135,000.
Stock-to-flow’s first incarnation demands an average BTC price of $100,000 this halving cycle, but May’s about-turn gave its time-tested precision a run for its money.
PlanB has nonetheless stuck by it, arguing that it has not yet been invalidated and that there are no proven better alternatives.
One such alternative model, which now appears unlikely to come true, is the logarithmic “diminishing returns” chart originally produced by Bitcointalk forum user Trololo in 2014.
An adjusted version calculates just $30,000 for BTC/USD at the end of this year, something that PlanB believes is less likely than Stock-to-Flow’s $100,000.
“Next months will be key,” he added in comments on an accompanying chart contrasting the two models.
When double top?
As Cointelegraph reported, short-term BTC price analysis is erring on the cautious side this week.
Related: More like ‘shock-to-flow’ — BTC price hits bull trigger as mystery buyers scoop up supply
As $50,000 remains out of reach as support, opinions are differing over the potential impact of the U.S. Federal Reserve’s annual Jackson Hole summit, which is shortly to get underway.
Despite rallying 60% versus recent lows of $29,000, Bitcoin has yet to challenge final resistance to cement $50,000, let alone all-time highs of $64,500 from April.
Zooming out, optimism remains the name of the game, with data hinting at a fresh bullish surge to come before the year is out. This would copy other post-halving bull market years, notably 2013’s double top.
Trend Line Touch Could Send Bitcoin On A Tear
Popular Bitcoin model Stock-to-Flow (S2F) shows BTC has touched a trend line that has historically sent the crypto flying.
Bitcoin Touches S2F Deflection Trend Line
As pointed out by a crypto analyst on Twitter, BTC seems to have just touched a lower S2F deflection trend line.
The S2F or Stock-to-flow Bitcoin model helps in predicting the price of BTC. The method has proved to be remarkably accurate so far, besides a few points of deviation.
S2F model is based on the ratio between the stock (supply) and the flow (annual production). The model can be applied to any asset, not just BTC. A higher value of the indicator means the commodity is more scarce.
Here is how the latest S2F chart for Bitcoin looks like:
The BTC S2F chart seems have a negative deflection at the moment | Source: buybitcoinworldwide.com
As the graph shows, despite some deflections during certain periods, the model still seems to be close. Currently, the chart shows a negative deflection.
Now, there is another, related indicator of relevance here. The Stock-to-Flow deflection. This metric highlights whether an asset is undervalued or otherwise in terms of its S2F value.
Related Reading | On-Chain Expert Predicts $162K Bitcoin Peak This Cycle
The BTC S2F deflection is calculated by taking the ratio between the current price and the S2F value. When the ratio is more than 1, it means BTC is overvalued, while if it’s less than 1, the crypto is said to be undervalued.
Below is a chart that shows the current trend in the BTC S2F deflection value:
The BTC S2F deflection ratio is much less than 1 right now | Source: glassnode
As the graph shows, there is a trend line that Bitcoin has touched in the past, soon after which the price has jumped up.
It seems like the crypto has once again made a touch on this line, and if past pattern follows, the price might move up.
BTC Price
At the time of writing, Bitcoin’s price is around $38k, up 2% in the last 7 days. Over the past month, the coin has accumulated 8% in gains.
Here is a chart showing the trend in the value of the cryptocurrency over the last 6 months:
BTC seems to be once again moving downwards | Source: BTCUSD on TradingView
After a relieving period of sharp uptrend where Bitcoin reached $42k, the coin is once again falling down. As the S2F deflection trend line shows, it’s possible the price might shoot back up. However, that’s only given the pattern indeed holds.
Related Reading | “The Death Of China’s Bitcoin Mining Industry,” 7 Takeaways From The Article
Also, something to note here is that even if the pattern holds, the price might not immediately go up. As the S2F deflection chart shows, BTC touched the trend line twice in 2017 before shooting back up.
More like ‘shock-to-flow’ — BTC price hits bull trigger as mystery buyers scoops up supply
Bitcoin (BTC) is due for a fresh price surge if one classic price model repeats historical behavior — and buyers are still supporting it.
In a tweet on Aug. 3, analyst William Clemente noted that BTC/USD has reached a bullish springboard zone on the stock-to-flow model.
Analyst “likes odds” of stock-to-flow induced bull trigger
Despite lingering far below stock-to-flow projections on a day-to-day basis, Bitcoin could now use that seemingly bearish signal to its advantage.
Stock-to-flow deflection — Bitcoin’s price relative to the model’s estimate — is now so wide that it has only been matched five times in Bitcoin’s history.
On each previous occasion, after reaching this lower deflection boundary, Bitcoin has “gone on an absolute tear” afterward.
“I like my odds,” Clemente added in comments on an accompanying chart.
As Cointelegraph reported, stock-to-flow creator PlanB, while worried about the recent BTC price dip, has stuck by his creation in the face of naysayers, predicting a minimum end-of-year price of $135,000. This, he has said, would be a “worst-case scenario.”
OTC buyers suspected as BTC transfers spike
Meanwhile, large-volume investor activity could already be helping suck up the “flow” component of the stock-to-flow bull case.
Related: Betting on tax bill FUD: 5 things to watch in Bitcoin this week
According to data from on-chain analytics service CryptoQuant, an unidentified market force is buying “a lot” of BTC — but not via exchanges.
“If big names announce their buying, bears could be in a trouble. I’m not sure about short-term price moving tho,” CEO Ki Young Ju noted on Twitter.
The phenomenon has already been caught by analysts, who nonetheless have urged caution with trading at current price levels as BTC/USD attempts to consolidate.
“I am a Bitcoin buyer above 40k or below 36k,” popular Twitter trader CanteringClark summarized Tuesday.
“Right here we have some long leverage accumulating.”