PlanB: Stock-To-Flow Model Still on Track For Over $100K Bitcoin This Year
Quantitative analyst and one of the most followed Bitcoin traders, PlanB believes that his >$100K end-of-year price forecast for Bitcoin will happen.
Speaking on Peter McCormack’s What Bitcoin Did podcast, along with Willem Middelkoop, the pseudonymous analyst PlanB says that he still believes in the stock-to-flow model he popularized in the cryptocurrency space.
The stock-to-flow model, which typically used in valuing traditional assets, aims to predict price by measuring existing supply against production rate.
PlanB voiced his believe that Bitcoin will hit a six-figure price by the end of 2021.
“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.”
PlanB also pointed out that the S2F is a linear-regression-based model. Meaning that the relationship between two variables is formed by applying a linear equation to the data. Therefore it is very “easy” to determine when the stock-to-flow model becomes invalidated.
“It’s just a linear regression, right? So it’s very obvious when that regression is no longer valid…
[The stock-to-flow model] says we should go up with the stock-to-flow ratio that has gone up since the halving. So we’re sort of waiting for that. But when it stays down – so when we stay at 30, 20, 40 thousand dollars for a couple of years, for example, a couple of months – then it’s obvious that this linear regression line is no longer fitting the data.
It is very easy to see when it’s invalidated. And people can do that themselves.”
He also mentioned that it’s difficult to please the critics of the model. When the model is tested in the upper limits people complain, when in the lower limits, people complain…
Willem Middlekoop is also a very interesting character with an interesting background as a journalist turned gold bug, who became a bitcoiner. The podcast is worth listening.
