Bitcoin Set for $288K by 2020 via Updated Stock-to-Flow Model

by
<title>
My articles My books
Follow on:

Over the years, several analysts have come up with different ways of predicting the Bitcoin price trajectory. Most of these models have been quite bullish, and keep investors interested in the market, hoping that the price will spike. The Bitcoin Stock-to-Flow (S2F) model created by popular analyst PlanB, is the most popular. In a new publication, PlanB has made a new prediction for Bitcoin at $288,000, using an improved version of the stock-to-flow model.

Bitcoin Stock-to-Flow Cross Asset Model

The new Bitcoin prediction is based on what he describes the Stock-to-Flow Cross Asset (S2FX) Model. This is an update on the earlier Stock-to-Flow model released last year. According to PlanB, the new model works with Bitcoin in phase transitions. Explaining this, PlanB describes phase transitions with other things like water and the U.S. Dollar.

Water has transitioned into different phases, including solid, liquid, gas, and ionized. Even though they’re all water, they can exist with different properties per phase. The U.S. dollar has also had its transition phases, from a gold coin to gold-backed paper, and now to paper, not backed by anything.

In the article, PlanB refers to a 2018 study by Nic Carter and Hasu, which shows that Bitcoin has also gone through different phases. The first was the proof of concept phase where Bitcoin was, immediately the whitepaper was released. The next phase was the payment phase when 1BTC was equal to $1. The next was the E-Gold phase, which happened when Bitcoin and Gold were almost at par in price, after the first halving. The fourth phase was the financial asset phase which happened after the second halving. At this point, legal issues surrounding Bitcoin began to clear out, all over the world. At this point, Bitcoin started pulling daily transactions worth $1 billion.

For this model, PlanB adds silver and gold, updating it to a “real cross-asset model.” With this new model, using regression analysis, PlanB puts Bitcoin at $288,000 by 2024. He also says that Bitcoin’s market value, considering May’s halving and the next one, will hit $5.5 trillion.

Bitcoin Stock-to-Flow Model

Originally published in March last year, the Stock-to-Flow model works with two important parts of Bitcoin’s market nature. The stock describes the current size of Bitcoin’s reserves or stockpiles. The flow is Bitcoin’s annual production supply. At the time, PlanB used the Stock-to-Flow model to predict that the upcoming halving would be bullish for Bitcoin. According to him, Bitcoin will hit $55,000, with a total market cap of $1 trillion.

Bayern LB, one of Germany’s biggest banks, considered the Stock-to-Flow model and made a larger prediction for Bitcoin, after May’s halving. The bank believes that Bitcoin will hit $20,000 before the end of 2020. Even though both Bitcoin and gold cannot simply be produced on a whim, Bitcoin has a finite supply. This quality has considerably surged Bitcoin’s Stock-to-Flow ratio, over time.

At the moment of writing, Bitcoin is trading at $7,787 which means that the asset has added around 1% in 24 hours.

Author: Tolu Ajiboye

Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge. When he's not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.

Thank you!

You have successfully joined our subscriber list.