Famous Bitcoin model predicts a new price explosion

The Bitcoin (BTC) stock to flow (The S2F model is a well-known and popular model that compares the relationship between the production of the crypto coin and the existing supply. It is mainly used to analyze bitcoin scarcity and possible future price movement. The model was introduced and popularized in the Bitcoin community by Dutch analyst PlanB.

The model is particularly popular with long-term investors. Although cryptocurrencies are generally very volatile and the price can fluctuate in the short term, there has been a clear uptrend over the years. What is special about Bitcoin is that the flow or new production of Bitcoins is halved about every four years, which is referred to as “halving”. This means that Bitcoin’s S2F ratio is regularly increasing, suggesting that scarcity is also increasing.

The past rhymes

In the PlanB model, the course of the BTC price is plotted against the S2F model. The different colors, from blue to red, have to do with the number of days that the next halving is coming up. A number of trends emerge from the chart.

First, we see that the market’s peak occurs roughly between the two halving events. In contrast to this is the price development of the S2F model, which is shown in grey. In fact, there seems to be a lag in price development. Second, before the halving, the market appears to be making a new low and then continuing to climb, all the way to a new one bull Market. Finally, it is noticeable that the peaks decrease relatively compared to the S2F model. Over time, the price of BTC increases less as a percentage. No wonder, considering that the market capitalization is increasing and more and more money is needed for a price increase.

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What can we expect?

If we continue the line long-term, expect the price to only go up from now on. We are expected to see a new BTC high towards the end of 2024 or early 2025. If the S2F model is anything to go by, the price could end up being several tons. Whether that will actually happen remains to be seen.

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