Bitcoin Price Diverges $130K from PlanB’s S2F Model Predictions"

In Brief:

PlanB’s Stock-to-Flow model, which predicts Bitcoin’s price based on scarcity, has been off by approximately $130,000 since 2021.

Other models like the Rainbow Price Chart and Power Law Model have provided more accurate predictions during this period.

S2F Model Faces Major Discrepancy

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PlanB’s Stock-to-Flow (S2F) model, renowned for predicting Bitcoin’s price based on its scarcity, has come under intense scrutiny. Since 2021, Bitcoin’s value has remained significantly below the model’s expectations, with a current discrepancy of about $130,000.

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The S2F model, which links Bitcoin's price appreciation to its decreasing supply due to halving events, had projected a price of around $180,000. In reality, Bitcoin is trading just above $50,000, raising questions about the model’s reliability amidst unpredictable market conditions.

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Alternative Models Provide More Accurate Predictions

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Several other analytical tools have outperformed the S2F model in predicting Bitcoin's price movements this cycle.

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The Rainbow Price Chart, which categorizes price levels by market sentiment bands, has shown Bitcoin trading within moderate bands since 2022. This suggests a period of stable growth without reaching speculative peaks, contrary to the S2F model’s higher estimates.

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Bitcoin’s current price of $50,000 is $220,000 below the upper limit of the Rainbow Chart.

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The Power Law Model, which describes relationships where one quantity varies as a power of another, has also provided more accurate projections.

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This model outlines a long-term price channel with defined support and resistance levels. Bitcoin’s recent price movements have adhered more closely to this model, maintaining an upward trajectory within its channel but frequently encountering higher-level resistance.

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According to the Power Law Model, Bitcoin is just $40,000 below its regression fit or fair price.

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Complexity of Predicting Bitcoin’s Price
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These discrepancies underscore the complexity of predicting Bitcoin’s price. While the S2F model has been a popular framework, its shortcomings highlight the need for a more nuanced understanding of market forces, including investor sentiment, technological developments, and broader economic conditions.

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The deviation of up to $130,000 from the S2F model’s forecast illustrates that no single model can fully account for the diverse and dynamic factors influencing Bitcoin’s value.

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The Power Law Model, which appears in both natural and man-made phenomena, seems to align more closely with Bitcoin, a currency directly correlated to its energy usage.