$ 100,000 bitcoin still possible after halving, says PlanB

Only 5 months to go before the bitcoin block halving takes place. Well-known crypto analyst PlanB tweeted about this and says that we are still on the right track.

Contents hide

1 We are on course

2 Also criticism of model

3 Drawing inspiration from S2F

4 Related posts:

We are on course

The anonymous Dutch analyst says that the value of bitcoin continues to follow his stock-to-flow model well. Although the bitcoin price went up and down in 2019, with a high of 14,000 dollars and a low of 3,000 dollars, bitcoin remains on course to become worth 100,000 dollars.

He says that halving the rewards for bitcoin miners, which is likely to take place in May of next year, remains one of the strongest catalysts for the future growth of bitcoin.

“In my opinion, the run-up is not bearish at all, we are close to the value of the stock-to-flow model, comparable to the last two halves.” no more growth.

#Bitcoin halving .. 5 months to go ?
For miners: production cost of 1 btc will double
For investors: stock-to-flow (unforgeable scarcity, inability to inflate stock) will double pic.twitter.com/JWNbJyil4a
– PlanB (@ 100trillionUSD) December 1, 2019

But when does bitcoin become worth $ 100,000? The model suggests that this value will be achieved between 2020 and 2023. You can see that in the tweet below, where PlanB shares a logarithmic chart of stock-to-flow.

This is becoming scary: using Oct instead of Dec data, Stock-to-Flow model fit improves to 99.5% R2! Model error was mainly caused by Nov2013 and Dec2017 ATH, so sampling without ATH gives less noise. Predicted #bitcoin prices increase: $ 100K (2020+), $ 1M (2024+), $ 10M (2028+) … pic.twitter.com/1WX6LOVxZW
– PlanB (@ 100trillionUSD) July 14, 2019

Stock-to-flow measures the existing bitcoin supply against the amount of bitcoin in circulation. Normally this model is used to determine the value of raw materials. For example, the value of gold is examined to show how the scarcity or abundance of an asset is linked to its value.

Also criticism of model

Despite the popularity of stock-to-flow, there are of course also people who question the model. Analyst and economist Alex Krüger says that stock-to-flow is far from reliable.

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“Amazing how so many people nowadays bring up S2F when someone calls bitcoin delivery … I don’t think it’s very important, it’s hugely over-hyped. The Stock to Flow model has the same meaning for bulls as what the tether manipulation has for bears. Both are based on attractive-looking statistical models. Both are defective. I doubt that someone will change their mind if they believe in one of these extremes. The mind believes what it wants to believe. “

The Stock to Flow model is to bulls, what the Tether Manipulation paper is to bears. Both based on fancy looking statistical models (more so the latter). Both are flawed. Doubt whoever believes in these extremes will change their minds. The mind believes what it wants to believe.
– Alex Krüger (@krugermacro) November 6, 2019

Drawing inspiration from S2F

The model is not only criticized, but has also provided inspiration to build your own models. But for the time being, these are not as successful as S2F.

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Harold Christopher Burger developed a similar model, but instead of taking the natural logarithm of the stock-to-flow ratio as an independent variable, he thinks the natural logarithm of time would be a better input. He reasoned that stock-to-flow is a function of time, so time is a better indicator. His model is dismissed by most analysts as less than S2F.

AIC or ln (market price) ~ ln (Stock to Flow) is lower than ln (market price) ~ time, showing that ln (SF) is a better predictor than time. cc @ 100trillionUSD pic.twitter.com/3OjaO2iVKE
– Nick ╭ʕ • ᴥ • ʔ╮ (@phraudsta) September 16, 2019

An extensive comparison of both models can be found here.