PlanB, the popular cryptocurrency analyst and creator of the stock-to-flow (S2F) model applied to Bitcoin (BTC) believes that the S2F model is still valid despite the current bear market. At the same time, he wrote on Twitter that he expects a bounce back above the S2F model value before the 2024 halving event.
PlanB Believes in the S2F and its Validity
PlanB, one of the most controversial analysts in the cryptocurrency market, believes that its S2F model is still valid and Bitcoin could bounce inside the S2F range before 2024’s halving event. Over the last years, PlanB shared with his audience the Stock-to-Flow model in which he measures Bitcoin’s scarcity to predict possible price ranges for this digital currency.
The Stock-to-Flow model can also be used for other assets (especially gold and silver) and it shows the relation between the stock (existing stockpile) and the flow (the annual production of Bitcoin or other assets). The larger the number obtained between Stock/Flow, the harder the asset and the scarcer it becomes.
An asset that has a high stock-to-flow would adjust demand shocks with the price compared to assets with a low stock-to-flow that can adjust demand shocks with a larger production (flow).
In the most recent S2F model, PlanB shows that Bitcoin is currently touching the lowest boundary of the price range. This could be related to Bitcoin’s price action in recent months. PlanB explains that he is being asked if the S2F model is still valid. For him, it is still valid and the price is not more or less off than in 2011, 2013, and 2017.
About it, he wrote on Twitter:
“People ask if S2F model is still valid. I think it is. We can go technical on autocorrelation & cointegration, but key is IMO that BTC price is not more/less off than in 2011, 2013, 2017. IMO S2F model is valid and I expect a bounce back above S2F model value before 2024 halving.”
People ask if S2F model is still valid. I think it is. We can go technical on autocorrelation & cointegration, but key is IMO that BTC price is not more/less off than in 2011, 2013, 2017. IMO S2F model is valid and I expect a bounce back above S2F model value before 2024 halving. pic.twitter.com/fbjskn5LFH
— PlanB (@100trillionUSD) September 12, 2022
As you can see in the Tweet above, the Bitcoin price is almost out of the range. Let’s not forget that Bitcoin has been moving lower since November 2021 when it reached an all-time high of $69,000 in some exchanges. At that time, the crypto community believed that Bitcoin was headed towards $70,000 and even $100,000. Nevertheless, a new bear market started, pushing Bitcoin below $18,000 for a brief period of time.
The question is whether Bitcoin will start recovering soon or if it will continue with the current bear market that started in November. According to PlanB, it is possible for Bitcoin to start moving higher and get back to the price range before 2024 when Bitcoin will experience a new halving event.
In 2024, Bitcoin will halve its reward to miners from 6.25 BTC per block to 3.125 BTC per block, increasing the S2F value for Bitcoin. This could have a very positive impact on the price of the largest cryptocurrency in the market according to PlanB.