PlanB Believes in the S2F and its Validity
Categories: Crypto News
PlanB Believes inthe S2F and its Validity
PlanB, one of the most controversialanalysts in the cryptocurrency market, believes that its S2F model isstill valid and Bitcoin could bounce inside the S2F range before 2024’shalving event. Over the last years, PlanB shared with his audience theStock-to-Flow model in which he measures Bitcoin’s scarcity to predictpossible price ranges for this digital currency.
TheStock-to-Flow model can also be used for other assets (especially gold andsilver) and it shows the relation between the stock (existing stockpile) andthe flow (the annual production of Bitcoin or other assets). The larger thenumber obtained between Stock/Flow, the harder the asset and the scarcer itbecomes.
An assetthat has a high stock-to-flow would adjust demand shocks with the pricecompared to assets with a low stock-to-flow that can adjust demand shocks witha larger production (flow).
In the mostrecent S2F model, PlanB shows that Bitcoin is currently touching thelowest boundary of the price range. This could be related to Bitcoin’s priceaction in recent months. PlanB explains that he is being asked if the S2F modelis still valid. For him, it is still valid and the price is not more or lessoff than in 2011, 2013, and 2017.
As you cansee 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 itreached an all-time high of $69,000 in some exchanges. At that time, the cryptocommunity believed that Bitcoin was headed towards $70,000 and even $100,000.Nevertheless, a new bear market started, pushing Bitcoin below $18,000 for abrief period of time.
The questionis whether Bitcoin will start recovering soon or if it will continuewith the current bear market that started in November. According to PlanB, itis possible for Bitcoin to start moving higher and get back to the price rangebefore 2024 when Bitcoin will experience a new halving event.
In 2024, Bitcoinwill 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 onthe price of the largest cryptocurrency in the market according to PlanB.