Bitcoin has spent the weekend consolidating in the mid-$8k zone following a week of sharp declines through several levels of support. The stock to flow model is still holding course though which means big gains could be ahead after the halving.
BITCOIN STOCK TO FLOW HOLDING STRONG
Bitcoin has corrected around 20% from its 2020 peak to yesterday’s low of just over $8,400. It has held in the mid-$8k range for a couple of days low leading analysts to believe that the bottom could be in.
With just 70 days to go to the halving, analyst ‘PlanB’ has revisited his stock to flow model noting that things are right on track with it.
The stock to flow (S2F) model examines the relationship between the production of supply and the current stock available.
Using this model, the analyst has predicted a rise to around $80-$100k in the months following the halving. Previous events in 2012 and 2016 saw huge rallies in the years that followed and many are expecting that 2021 could be even bigger for Bitcoin than this year.
There has been some critique of this model with the Efficient Market Hypothesis (EMH) being the best argument against it. Essentially EMH states that the model is based on publicly available information and therefore the analysis and conclusion must be already priced in. Read More...