Bitcoin (BTC) remains a topic of intense discussion, especially with recent statements from PlanB, the creator of the stock-to-flow (S2F) model. PlanB has indicated that Bitcoin is currently in its "pre-bull market" phase, suggesting that the days of BTC trading below $40,000 are limited.
This perspective offers a glimpse into the potential trajectory of Bitcoin's value, stirring interest and speculation among investors and crypto enthusiasts. PlanB, a recognized name in the crypto industry, encourages buyers to seize the opportunity to augment their Bitcoin holdings while it's still trading under $40,000.
This advice comes amid a broader analysis of Bitcoin's price movements and underlying economic factors.
Understanding the Stock-to-Flow Model and Bitcoin's Value
The stock-to-flow model, which PlanB created, plays a pivotal role in his analysis.
This model primarily examines the relationship between the production rate (flow) and the existing stock of an asset to predict its future price. For Bitcoin, the S2F model focuses on its halving events — periods when the reward for mining Bitcoin transactions is halved, effectively reducing the rate at which new Bitcoins are generated.
PlanB's forecast is bolstered by Bitcoin's realized price data. The realized price, calculated as Bitcoin's realized cap divided by its current supply, stands just below $21,000. Historical patterns suggest that bear market bottoms occur when the spot price dips below the realized price.
Conversely, bull markets seem to initiate when the spot price surpasses the two-year and five-month realized price levels, indicating a shift in the market dynamics based on the activity of "younger" coins. Currently, BTC/USD has risen above all three iterations of the realized price, which PlanB interprets as a harbinger of an impending price surge.
"Enjoy sub-$40k bitcoin ... while it lasts," he commented, aligning with his optimistic view of Bitcoin's future. PlanB refrained from predicting immediate price dips, instead focusing on a broader horizon. He anticipates an average Bitcoin price of at least $100,000 between 2024 and 2028, aligning with Bitcoin's next halving cycle.
Despite facing criticism over the S2F model and acknowledging that Bitcoin did not entirely meet his expectations in the 2021 bull market, PlanB's six-figure predictions for the next cycle resonate with a growing consensus among analysts.
As the cryptocurrency landscape continues to evolve, PlanB's insights provide a compelling narrative for investors and enthusiasts alike, offering a perspective on Bitcoin's potential growth in the coming years.
IMO bitcoin is currently in pre-bull market (yellow) and on track towards a full blown bull market (red, after halving unless earlier ETF approval).
Note I changed colors and stage names again, to better align with S2F model:
🟢bear market pic.twitter.com/tmayjteVWv — PlanB (@100trillionUSD) November 19, 2023