Bitcoin ‘Stock-to-Flow’ model did not fail: PlanB

Paigambar Mohan Raj
Source: Time

PlanB, the famous and anonymous trader, appeared for an interview with Scott Melker. PlanB is noted for being incredibly successful in predicting the price of Bitcoin (BTC) in the previous bull run. While speaking with Melker, PlanB first and foremost remarked on the current bear market. He said that bear markets are “a part of the game.” He further added,

“Bear markets are good for building and talking about the fundamental stuff.”

PlanB is most noted for applying the stock-to-flow (S2F) model to Bitcoin (BTC). Stock-to-flow model is an approach that estimates a commodity’s future price based on its scarcity. Stock refers to a commodity’s entire current supply, and flow is the annual creation of fresh supplies of the same commodity. This concept was applied to predict the price of precious metals such as gold and silver.

Although many believe that the S2F model for BTC is dead, PlanB thinks otherwise. He noted that the model he used to successfully predict the price of Bitcoin three times in a row was not the S2F model but a “failed floor model.” The floor model was designed to predict where the floor would be, and Bitcoin fell below the model’s predictions, therefore the failure.

He further added,

“The stock-to-flow model, in my opinion, did not fail.”

Many have pointed out that the S2F model does not consider demand. Some even point to the S2F model not anticipating a period of inflation like the one we are in now.

How high will Bitcoin prices go?

PlanB believes that BTC‘s price will revert to the S2F model price. He predicted that,

“If we assume that the old model, the original 2019 model is correct, the $55,000 model, then the next halving could lead to prices somewhere — and I’m making a very wide range, some people don’t like it — but somewhere between $100,000 and a $1 million.”

Unless his model is shown to be incorrect or “Bitcoin dies,” according to PlanB, he is confident in the forecast. Furthermore, the anonymous trader says that the current BTC rates are a steal and that he is very optimistic.

PlanB has predicted that a bottom for BTC prices might occur within the next three months. He claimed that Bitcoin witnessed a bear market roughly 18 months after reaching a record-high price.

At press time, BTC was trading at $16,828.89, down by 0.5% in the last 24 hours.