The bitcoin (BTC) price has not been doing well for the past few months. In fact, a few days ago, the price dropped below $20,000. This was not exactly within the line of expectations for many crypto investors. A famous model, it stock to flow The model, which predicted the price of bitcoin in the past with astonishing accuracy, seems to have been completely disproved by the volatility of recent times.
PlanB and the bitcoin stock-to-flow model
In 2019, the Dutch investor and analyst came under the name planB with his stock to flow fashion model to predict the price of bitcoin. He used a formula between the stock of bitcoin and the production capacity. In the past, this model of PlanB proved to be extremely accurate.
This ensured that many people firmly believed in the model. The model also predicted that by 2021, or at least by early 2022, the price of bitcoin should have risen above $100,000. We now know that this was far from being achieved. On the contrary, the bitcoin price is currently lower than many thought possible.
The PlanB model therefore no longer has the same status as it had last year. Most investors today view the stock-to-flow model as nothing more than another failed way to predict price.
Has the BTC model been debunked?
It is actually quite difficult to come to a different conclusion. PlanB’s model already used a certain standard deviation, but the price of bitcoin is currently well outside this zone. The prediction just didn’t come true.
The model is simply unable to account for external factors, such as the current macroeconomic situation. It can certainly be useful to model the relationship between production capacity and total supply, but this by no means shows the full picture.
Bitcoin isn’t dead.
But the Stock-to-Flow scam absolutely is. pic.twitter.com/ZYZ0NR8n92
— Zack Voell (@zackvoell) June 19, 2022