BTC - Stock to Flow says price is right where it should besteemCreated with Sketch.

in bitcoin •  last month  (edited)

With a little over 3 months until Bitcoin's next halving, price is exactly where it should be

That is according to the stock-to-flow model that has predicted bitcoin's price moves with over 90% accuracy to date.

At least according to this:

https://www.ccn.com/bitcoin-stock-flow-model-complete-nonsense-bloomberg-editor/

The stock-to-flow model forecasts bitcoin prices using two inputs; the number of bitcoins in circulation (the stock) and the number of new bitcoins entering circulation (the flow).

The idea is that as the new supply (the flow) slows, the price must keep going up.

The resulting chart as it relates to bitcoin looks something like this:

(Source: https://cointelegraph.com/news/bitcoin-price-matches-stock-to-flow-forecast-as-100k-halving-nears)

Yes yes, I know, the whole thing sounds a little like pseudo-science in terms of predicting bitcoin's prices...

But guess what...

This is the same model that has been used to forecast gold and other precious metal prices for decades, and it has mostly worked.

With bitcoin, thus far, it has been over 90% accurate in terms of predicting prices.

So, given that kind of track record, it makes a lot of sense to pay attention to what the forecast is pointing to.

And, in terms of bitcoin, it is currently trading exactly where it should be according to the model.

What's more...

If this model continues to accurately predict prices, it is saying that bitcoin will be $100k at some point by 2022.

I'm not sure about you but I sure like a model that is predicting $100k bitcoin prices that has been over 90% accurate thus far!

C'mon stock-to-flow, keep doing your thing!

Stay informed my friends.

-Doc

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TA and analyses like these are always true until they're not.

Regardless, definitely a good tool to use to help people become better traders.

Yep, and this will not be true at some point. If you extrapolate out, you end up getting a market cap of bitcoin that is bigger than all the world's wealth combined. Obviously that cannot happen. So, at some point the stock to flow will stop working.

Stock-to-Flow has been my go to chart for projecting/bench-marking long-term price movements for Bitcoin, and it's been rather accurate thus far, with Bitcoin's actual trajectory falling in line with S2F eventually.

In fact, I've made a post about projecting Bitcoin's move to $100,000: How high can we go - Can Bitcoin get to $100,000?

It's simple calculations, but I deduced that Bitcoin will reach a post-Halving high of $144,000 by around end-March 2022, so it falls rather accurately in line with Stock-to-Flow. Also, following an ~80% correction after reaching its highs, Bitcoin might fall back to $24,000 after that. Coincidence?

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Those timelines and price targets match up very well with past patterns and my own line of thinking as well. Nicely done!

Thanks! Your original post on the halvings inspired me to take a second look at it, and maybe come up with a simple deduction. Time will tell if I'm right...