What’s the Issue with S2F’s $288,000 Bitcoin Price Prediction?
Popular analyst PlanB who is known for his scarcity-based stock-to-flow model recently in an interview on Peter McCormack’s podcast What Bitcoin Did talk about how Bitcoin is “not a toy anymore.” From a toy, the digital asset has evolved into magical internet money and now to dollar parity.
Reflecting on the world’s leading cryptocurrency’s past ten years, the analyst said bitcoin may not even be an asset anymore as “it's gonna be much bigger than that.”
Further moving onto his model, he points out a very famous quote about models that says, ‘“all models are wrong but some are useful’ and that's very true.” As for his updated S2FX model,
“it's more useful (than the original S2F) because it forces you to think in phases, in big steps – in this case, a hundred billion dollar Bitcoin into a multiple trillion-dollar Bitcoin market value. That's a huge leap and it's not gonna be a gradual thing that something is going to change in the next couple of years.”
If it doesn’t then all bets are off which means the model will break.
“I would be very happy if it would only forecast the next halving or maybe two halvings correct that would be very useful right now,” said the analyst.
Reciting another famous quote, “I'd rather be roughly right than exactly wrong.” PlanB said “that's why I always talk about orders of magnitude right with this model It's not about the exact dollar value of Bitcoin.”
The S2FX model doesn’t provide precise targets rather rough ones. The actual Bitcoin will be above or below, scattered around that target.
Instead of getting married to the model and putting all the belief and money into it, which is “so stupid,” the model should be seen as a way of structuring thinking about something and maybe get some rough direction from it, he added.
Issue with the $288,000 in 2021
As we have reported, this model has a number of critics. Bitfinex bitcoin whale Joe007 is one of those who had said,
“One problem with the S2F model is that it's divergent, predicting a ridiculous price of $1 trillion BTC by 2050 and infinity after 2140. An alternative FSM model is convergent and more realistic. But if you expect $1M BTC any time soon you may be disappointed.”
The bitcoin whale, however, does believe in Bitcoin which he said is “much more than just a currency.” He said earlier this year,
“It's a completely new social technology: non-political non-confiscatable self-sovereign extra-hard money. I expect it to precipitate a transition of humanity to a completely new economic and social order that will slowly emerge over time.”
This latest model meanwhile also puts the bitcoin price at $288k, up from $100k projected by the original S2F model. This means the price could be both over and below this fixed price line from 2020-2024.
However, not everyone believes in these numbers.
Crypto enthusiast Tyler Durden said the problem with this new high is the daily volume required to take bitcoin to $288,000. This can’t happen in a single daily candle and as such needs “sustained volume over a fairly medium-term time frame.”
My issue with #btc at $288,000 in 2021 is not the price – I believe it’s true value is higher – it’s the daily volume required up there.
$1/4bil to cover the output alone. Today it’s $14.4mil.
In the middle of the largest liquidity crises the world has ever seen.
— Tyler (@TylerDurden) May 4, 2020
Analyst Bob Loukas counters the view with, “Think of the hysteria in 2017….now multiple many times. Would be a different animal on a massive scale. And a liquidity crisis won’t last years.”
The “real” bitcoin volume has been seeing a solid boost lately, with the daily volume (7-day average) once again above $2 billion.
You can listen to the full podcast here: