Bitcoin Stock-to-Flow Model on Track For Colossal Gains After Halving

Bitcoin has spent most of this week consolidating in the high-$8,000 region. The longer it stays here the less likely it is to make another massive dump. Momentum could be building for the upcoming halving which could create exponential gains if this particular model stays true.

Bitcoin Stock-to-Flow on Track

The stock-to-flow (S2F) model is the brainchild of an analyst who goes by the handle ‘PlanB’ (@100trillionUSD). It was originally published in March 2019 and examines the relationship between the production of supply and the current stock available — essentially calculating Bitcoin’s value through scarcity. With just 67 days to go until the next halving, the analyst has revisited his S2F model noting that things are still on track. Plotting prices that exactly match the model shows how accurate it has been in the past.

So I think May 2020 #bitcoin halving will produce similar results (red dots) as 2012 and 2016 halving. Why? Co-integration! ELI5: S2F and btc price stay together. Look at the white dots (1 means btc price is exactly S2F model value), btc is above and below model value EVERY YEAR. pic.twitter.com/kfrejvrRA2

— PlanB (@100trillionUSD) March 4, 2020

As happened in 2012 and 2016, the price may lag below the model for another year, represented by the red dots in the graph. However, if it can catch up at some time in 2021 it will put Bitcoin prices at around $100,000 according to this theory.

Where Will The Money Come From?

It’s all very well predicting six-figure Bitcoin prices, but that inflow of capital has to come from somewhere. So far this year BTC has gained 22.5% to current levels, but it’s going to take a lot more to reach new highs. When asked about where this new capital will come from, the analyst speculated several sources. He suggested that some will come from silver and gold, as institutional investors discover the best performing asset over the past ten years. Additionally, and this is much more relevant today than when the paper was written, inflow could come from countries with negative interest rates such as Japan, parts of Europe, and soon to be the U.S. Predatory governments such as Turkey, Venezuela, Iran, and China could create new momentum as could investors fearing more quantitative easing measures. India can now be added to that list as it has just been given the green light for cryptocurrency transacting.