The S2F Model (Stock-to-Flow model) has been extremely accurate to predict Bitcoin price action. This is according to Konstantin Anissimov, the Executive Director at CEX.IO. During a conversation with UseTheBitcoin, he stated that the prediction power of the S2F model is a direct result of the supply shock BTC experiences following each halving.
The S2F Model Became Very Accurate
The S2F model became very popular in the last years. This model was created by the cryptocurrency analyst PlanB and it allowed the market to predict how Bitcoin was going to behave in terms of price action.
The S2F model uses the existing stockpiles or reserves and it is divided by the yearly production. By using gold, PlanB explained that gold has the highest stock to flow model with a 62 result. That means that it takes 62 years of production to get current gold stock. A higher SF increases the monetary value of an asset.
Now, Bitcoin (BTC) has surpassed $20,000 for the first time in history and even reached $23,777 per coin. This is the highest price we have ever seen for Bitcoin in history. According to Mr. Anissimov, the $20,000 region could become a strong support for BTC. Meanwhile, the next targets seem to be $25,000 and even higher levels.
He has also stated that before the end of the year, there could be a short but impactful rally. This is something that could result in equally sudden and sharp corrections. Moreover, considering the holidays coming in the coming days, we might also see a price drop.
About the future of the digital asset, Anissimov said:
“For the time being, BTC is testing out the new price range, occasionally encountering smaller resistances that fall rather quickly. The $25k level is expected to be the real obstacle for the coin, and it will be interesting to see if the surge will allow it to break this level and set up an even higher ATH before the year ends.”
In terms of forecasts, as we mentioned before, the S2F model has been very accurate anticipating Bitcoin’s future price action. BTC scarcity correlates with the value of the network. This is expected to have serious positive consequences on Bitcoin. If we follow the S2F model, Bitcoin should be traded above $50,000 by the end of the first quarter of 2021.
At the time of writing, Bitcoin is being traded around $22,800.