Bitcoin To Reach $100k: Is The Stock-to-Flow Model Flawed?

In the recent video, popular crypto analyst Mike Jenkins from Coin Bureau discusses with his subscribers the validity of the Stock-to-Flow (S2F) model of Bitcoin and the potential of reaching 100k for BTC.

Stock-to-Flow model

Stock-to-Flow model is one of the most widely used charts for predicting massive future bitcoin price gains, showing the largest divergence since January 2019.

First released in March 2019 by the pseudonymous Plan B, the stock-to-flow model attempted to quantify the relationship between the relative scarcity of bitcoin and the price of the asset. Based on the regression analysis by PlanB, he was able to come up with this formula which depicts the linear relationship.

“The price has mapped the model pretty damn well over the past 9 years. Yes, there are periods where it seems to either be over or underpriced, but like some sort of celestial force, it comes back in line,” he comments.

The last time that Bitcoin lined up with the stock-to-flow model was back in March of this year. This was when Bitcoin was at 61k:

“Since that time though, it has continued to diverge away from the model predicted price and things have gotten progressively worse. We are now at a place where the theoretical value of Bitcoin should be 111k but the price is closer to 34k.”

This is a greater divergence than we had back in 2019 and 2018. According to the trader, as the result, there are some that think this presents a unique opportunity to pick up cheap Bitcoin. Yet, there are others that view this as more evidence that you can’t rely on a model like this to price an asset like Bitcoin.

Still Chance of 100k?

While the stock-to-flow model has its shortcomings and some of the assumptions are bold, Jenkins says that it makes sense on practical level. Scarcity is a quality that people value in particular assets.

“Bitcoin is perhaps one of the scarcest assets on earth. That is precisely because of its limited supply,”

He adds:

“But, you also have to consider the demand side of the equation as that will also impact on the price.”

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