An analyst at PlanB, known for adapting the stock-to-flow (S2F) model to the bitcoin market, is worried about the bearish sentiment of its subscribers, many of whom question bitcoin’s ability to follow its prediction. Bitcoin’s behavior has been relatively close to the range drawn with S2F over the past two years. A vote held on June 21 at the same time as bitcoin dropped below $ 30,000 showed that fewer market participants believe in the performance of S2F.
In the last vote, 41% of 124,595 respondents said Bitcoin would fall below $ 100,000 by the end of the year. This, in turn, would imply a violation of the S2F model. In March, when Bitcoin continued to rise and sentiment was much more bullish, there were only 16% of such.
“Even I get a little uneasy when the price of bitcoin falls below the low end of the range. Will it hold on (as it did in March 2019 when I published S2F, or March 2020, amid Covid, or September 2020, when Bitcoin stuck below $ 10,000), and will this be another buying opportunity? Or will it be the cancellation of S2F? ” – writes PlanB.
The S2F model is calculated based on the ratio of existing assets on the market to new ones, taking into account halvings. Its main problem is that it does not include demand, which, unlike programmed emission reductions, is not easy to predict.
The founder of The Investors Podcast Network, Preston Pisch, notes that hardly any mathematical model could account for the series of negative news that hit Bitcoin in recent years and accelerated the market decline.
“Are you saying that your model does not take into account the forced disconnection of more than 40% of miners from the network without prior notice for companies incurring high costs and a significant part of whose reserves are in BTC?” – he writes.
Bitcoin is trading at around $ 34,000 at time of publication, posting moderate gains for the third straight day after Tuesday’s crash.
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