The stock-to-flow model designed by pseudonymous Dutch quantitative analyst PlanB has become widely accepted by the crypto community as an accurate model to project the price of BTC. The analyst has released a new update to the S2F flow which suggests that bitcoin is still on track for a mega rally to $100k by the end of this year.
Despite BTC’s Extended Consolidation, It’s Still On Course For $100K
June was a rather uninteresting month for the bitcoin price. The benchmark cryptocurrency hovered between $9,000 and $10,000, with a move either above or below these regions being short-lived.
PlanB recently shared the latest update of his stock-to-flow model which shows that the month of July has started exactly as expected for a massive bull market to commence.
In a tweet on July 1, he confirmed that the second red dot – indicative of a bull run – is now present on the stock-to-flow cross-asset (S2FX) model. Worth noting that PlanB’s model uses colored dots to map BTC’s price until the next block reward halving. The red dots, in particular, have historically preceded an exponential growth in the price of bitcoin.
Based on the model, the next insane rally is on the horizon and should put BTC at $100,000 before the end of this year. Between 2020 and the next halving in 2024, BTC should be valued at an average of $288,000 per coin.
According to PlanB, the first red dot is June’s closing price. The second one is today’s price and is bound to change and be fixed at July’s closing price.
Is The Stock-to-Flow Model Fatally Flawed?
Notably, the model has quickly gained acceptance from crypto enthusiasts including Blockstream CEO Adam Back who said back in February:
“Well, it’s just a backtested curve fit to historic data, affirmed by co-integration stats test. What’s not to believe? More interesting is interpreting why, given good fit. It does seem logical that rate of supply halving, other things being equal, would tend to drive up price.”
Nonetheless, the model still has its detractors including Ethereum co-founder Vitalik Buterin. The latest market expert to show their disdain for the stock-to-flow model is the CIO and fund manager at Strix Levitan, Nico Cordeiro.
Cordeiro published a detailed post on June 30 entitled “A Chameleon Model – Why Bitcoin’s Stock-to-Flow Model Is Fatally Flawed”. He points out that gold’s stock to flow ratio over the past 100+ years has had no direct relationship with the price of the precious alloy.
The fund manager also argues that the fact that the S2F flow model forecasts $235 million per BTC by 2045 makes it irrational and reduces it to a “marketing piece in which the author is trying to convince readers that bitcoin is going to be worth a lot more tomorrow.”
In a different tweet today, PlanB has told his followers to look out for S2F critics who will try to discredit the model by claiming that it is “fatally flawed”, intended “to induce FOMO”, or that it has created a “cult”. He has previously coyly alluded that those criticizing the quantitative model should first disprove it.