A year after publishing the stock-to-flow model, PlanB is now solidifying the basis of the S2F model by removing time and adding other assets, gold and silver to the model to form a new model called the BTC S2F cross asset (S2FX) model.
Because weekly/daily data added more noise, PlanB went with monthly data and as cluster centers do not move, it “is the real signal.”
Here, all three of the assets are valued with one formula and it estimates a market value of the next BTC phase/cluster when BTC’s S2F will be 56 in 2020-2024 after this halving will be of $5.5 trillion.
This translates into a BTC price of $288,000.
Refined model for refining bitcoin
This model is a new way of thinking about BTC transitioning into the fifth phase. Phase transitions are important in understanding the S2FX model because transitions are often discontinuous and during phase transitions, things get different properties such as water that has four phases; solid, liquid, gas, and ionized.
Even the US Dollar had different phases, it transitioned from gold coin to paper backed by gold to a paper backed by nothing.
The same is true of bitcoin.
By combining the narratives with the financial system, we get four phases viz. “Proof of concept” after Bitcoin whitepaper, “Payments” after USD parity, “E-Gold” after 1st halving, almost gold parity, and “Financial asset” after 2nd halving.
In the BTC S2F Cross Asset (S2FX) Model, the four clusters are phase transitions which are quantified by minimizing the distance between monthly BTC data and clusters.
BTC “Proof of concept” has an S2F 1.3 and market value of only $1 million which is a totally different asset than BTC “Financial asset” with S2F 25 and $114B market value.
Adding Silver with S2F 33.3 and market value of $561B and Gold with S2F 58.3 and $10,088B market value, they all form a straight line.
Unlike the original S2F model, this model uses the regression analysis and finds a significant relationship between S2F and market value of these six assets with a perfect fit (99.7% R2).
This gives us the market value of the next BTC phase/cluster when its S2F will be 56 from 2020 to 2024 of $5.5 trillion translating into a BTC price of $288k.
This price projection is much higher than the original one at $55k but the analyst PlanB values the results of the S2FX model relevant because of the non-spurious S2F-price relationship and co-integration in time series analysis and high significance of F, low p-Values, and high R2.