‘Make or Break’ for Stock-to-Flow Model: The creator of the stock-to-flow (S2F) Bitcoin (BTC) price model says that the upcoming block reward halving will decide if it lives or dies.
Analyst looks for fundamental insights from halving
“(In my opinion) #bitcoin 2020 halving will be like 2012 & 2016. As per S2F model I expect 10x price (order of magnitude, not precise) 1-2 yrs after the halving,” he wrote.
“Halving will be make-or-break for S2F model. I hope this halving will teach us more about underlying fundamentals & network effects.”
Stock-to-flow measures the issuance of new Bitcoins each block against Bitcoin’s existing supply, a method which has proven highly accurate in charting price performance.
According to the model’s latest incarnation, BTC/USD should hit $30,000 by the end of 2020.
Bitcoin stock-to-flow chart as of April 17. Source: PlanB/ Digitalik
BTC, macro “will not correlate forever”
Continuing, PlanB responded to queries regarding Bitcoin’s correlation to traditional markets. A key concern among many traders is that a repeat of March could still occur, BTC/USD shedding 60% in a day as stocks crashed.
Highlighting the Dow Jones, PlanB argued that current correlation was the result of the broader coronavirus crisis, and was not a permanent feature for Bitcoin:
“During crisis everything is correlated. What’s next is what’s interesting. They will not be correlated forever (in my opinion).”
Promising to throw out the stock-to-flow model altogether if it fails to deliver as planned, he added that he nonetheless was not nervous about such a scenario occurring.
Recently, some well-known cryptocurrency figures have criticized the concept, arguing it is simply too optimistic and has created a “cult” which reinforces its prognosis. As Cointelegraph reported, they include Ethereum co-founder Vitalik Buterin and a Bitcoin whale known as J0E007.
“To be clear: I expect S2F-price relationship to hold,” PlanB confirmed.