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S2F Creator PlanB Believes In $98k Nov Target For Bitcoin

Bitcoin stock-to-flow (S2F) creator PlanB believes a $98k target for the cryptocurrency by November end is a realistic goal.

S2F Popularizer PlanB Sticks To $98k Target For November

Back in June, when Bitcoin was below $34k, analyst PlanB put out a list for his targets of the crypto in the subsequent months.

The tweet had these targets for BTC: Aug >47K, Sep >43K, Oct >63K, Nov >98K, and Dec >135K. So far, all these price goals have been decently accurate. But the real challenge will be the current month of November as the target for it is quite bold.

PlanB has used the stock-to-flow model for the predictions. S2F is based on the ratio between the current supply (stock) and the annual production (flow).

The S2F value shows how scarce Bitcoin is at a particular time. Based on this scarcity, the model uses a formula to predict the future price of the coin.

Here is the latest chart for this BTC price model:

Bitcoin price vs the line predicted by the S2F model | Source: buybitcoinworldwide

As the above chart shows, the model has been remarkably close to the real thing so far, although there were a few points of deviation.

Related Reading | S2F Model Creator Hypes Up $10K Daily Bitcoin Candles

Now, despite the apparent accuracy, some people in the community think the $98k BTC target for November set by PlanB is unrealistic, citing that the jump is quite large.

The analyst has responded by saying that while the jump is 60% from the level at the start of the month, BTC has achieved similar feats before. In the tweet, he lists examples of when it has happened in the history of the coin. Some of these jumps were May 2019 (62%), August 2017 (66%), May 2017 (66%), etc.

Related Reading | PlanB: S2F Model Predicts Bitcoin To Break $100k By Christmas

More people have raised concerns about the target in replies to the tweet, bringing up an important point that the market cap was significantly smaller during the previous times when BTC showed a similarly large monthly jump in the price.

Bitcoin Price

At the time of writing, BTC’s price floats around $65.5k, up 6% in the last seven days. Over the past thirty days, the crypto has amassed 18% in value.

The below chart shows the trend in the price of Bitcoin over the last five days.

BTC’s price has surged up today | Source: BTCUSD on TradingView

After going through consolidation for a couple of weeks, Bitcoin has finally shown a solid move up as the coin retouched $66k today.

This month will be a decisive test for the validity of PlanB’s S2F model as some people have raised concerns about whether the $98k target is actually achievable.

Featured image from Unsplash.com, charts from TradingView.com, buybitcoinworldwide.com

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Trend Line Touch Could Send Bitcoin On A Tear

Popular Bitcoin model Stock-to-Flow (S2F) shows BTC has touched a trend line that has historically sent the crypto flying.

Bitcoin Touches S2F Deflection Trend Line

As pointed out by a crypto analyst on Twitter, BTC seems to have just touched a lower S2F deflection trend line.

The S2F or Stock-to-flow Bitcoin model helps in predicting the price of BTC. The method has proved to be remarkably accurate so far, besides a few points of deviation.

S2F model is based on the ratio between the stock (supply) and the flow (annual production). The model can be applied to any asset, not just BTC. A higher value of the indicator means the commodity is more scarce.

Here is how the latest S2F chart for Bitcoin looks like:

The BTC S2F chart seems have a negative deflection at the moment | Source: buybitcoinworldwide.com

As the graph shows, despite some deflections during certain periods, the model still seems to be close. Currently, the chart shows a negative deflection.

Now, there is another, related indicator of relevance here. The Stock-to-Flow deflection. This metric highlights whether an asset is undervalued or otherwise in terms of its S2F value.

Related Reading | On-Chain Expert Predicts $162K Bitcoin Peak This Cycle

The BTC S2F deflection is calculated by taking the ratio between the current price and the S2F value. When the ratio is more than 1, it means BTC is overvalued, while if it’s less than 1, the crypto is said to be undervalued.

Below is a chart that shows the current trend in the BTC S2F deflection value:

The BTC S2F deflection ratio is much less than 1 right now | Source: glassnode

As the graph shows, there is a trend line that Bitcoin has touched in the past, soon after which the price has jumped up.

It seems like the crypto has once again made a touch on this line, and if past pattern follows, the price might move up.

BTC Price

At the time of writing, Bitcoin’s price is around $38k, up 2% in the last 7 days. Over the past month, the coin has accumulated 8% in gains.

Here is a chart showing the trend in the value of the cryptocurrency over the last 6 months:

BTC seems to be once again moving downwards | Source: BTCUSD on TradingView

After a relieving period of sharp uptrend where Bitcoin reached $42k, the coin is once again falling down. As the S2F deflection trend line shows, it’s possible the price might shoot back up. However, that’s only given the pattern indeed holds.

Related Reading | “The Death Of China’s Bitcoin Mining Industry,” 7 Takeaways From The Article

Also, something to note here is that even if the pattern holds, the price might not immediately go up. As the S2F deflection chart shows, BTC touched the trend line twice in 2017 before shooting back up.

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Bitcoin Fundamentals Suggest Cryptocurrency Is Massively Undervalued

Bitcoin price action might not reflect it, but the leading cryptocurrency by market cap could be massively undervalued, according to a variety of fundamental metrics that focus on coin issuance.

These tools are widely known, but when combined paint a clear picture that backs up any chance that the top coin by market cap is actually undervalued at $40,000 per BTC.

Speculative Boom And Bust Cycles And The Impact On Perception Of Value

Any asset – be it stock, currency, commodity, or otherwise – goes through boom and bust cycles; bull and bear markets. These cycles are more rapid and take place more frequently in crypto than they do in traditional market counterparts.

The reason is both due to the always-on 24/7, global crypto market and the speculative nature of Bitcoin, Ethereum, and other top coins. Even with adoption taking place, they’re still far from achieving their potential.

Related Reading | Five Bullish Monthly Charts That Suggest Bitcoin Will Blast Off

When speculative assets reach a peak of a bull cycle, they are typically far more overvalued than they should be, which causes such an extreme correction back down toward the “mean.” During bear cycles, speculative assets tend to overcorrect as things appear worse off than they actually are.

Bu this is Bitcoin, and the leading cryptocurrency by market cap might be undervalued even though it recently made a bull market “peak.”

S2F and the Puell Multiple point to an undervalued BTC | Source: BLX on TradingView.com
Bitcoin Undervalued According To S2F Model, Puell Multiple

Bitcoin might have collapsed by 50% along with the rest of the crypto market, but it could be significantly undervalued currently due to the overcorrection.

Bitcoin corrected and it was characteristically extreme, but due to the ongoing lack of supply the cryptocurrency is significantly below the normal trajectory through the stock-to-flow model “bands”.

Related Reading | Bitcoin Trend Strength Indicator Suggests Bull Run Isn’t Yet Over

In addition, the Puell Multiple is bouncing from lows, and during this cycle has yet to enter the red zone which is standard of any Bitcoin bull market “top.” The Puell Multiple is calculated “by dividing the daily issuance value of bitcoins (in USD) by the 365-day moving average of daily issuance value.”

The S2F model is more complex, but both look at how issuance impacts overall supply and the price per BTC. Combined, the two fundamental tools suggest that the bull market isn’t finished, and is entering its final stages. The last leg up in Bitcoin as past cycles have proven, will be dramatic and entirely driven by FOMO and a distinct lack of supply.

Follow @TonySpilotroBTC on Twitter or via the TonyTradesBTC Telegram. Content is educational and should not be considered investment advice.

Featured image from iStockPhoto, Charts from TradingView.com

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Plan B: The Next 6 Months Will Make Or Break Famed Bitcoin Model

The next 6 months will make or break S2F, the most famous Bitcoin model, says PlanB who popularized the method.

The Stock-To-Flow Model

The S2F model is a simple method used to predict asset prices. PlanB first posted a chart for Bitcoin based on the technique back in 2019.

Here is new chart based on the S2F method for Bitcoin’s current price prediction, posted by PlanB on Twitter:

Bitcoin price prediction

BTC's S2F model | Source: PlanB

The trend predicted by S2F is remarkably close to the real thing. There are a few points of deviation, however, including the current 2021 period.

As the name Stock-To-Flow would imply, it’s calculated by dividing the stock (supply) with the flow (annual production).

Higher the S2F value, more scarce is the commodity. PlanB used this table to showcase how this works:

The S2F values of some precious metals | Source: PlanB

As you can see, the above table shows data for a few precious metals.

The SF value indicates how many years it will take based on the production levels (or flow) to mine out the same amount as the current stock.

For example, in the case of gold, the SF value is 62, which indicates it would take 62 years to take the current stock out of ground.

Related Reading | Why This U.S. Congressman Compared Bitcoin Investment With Playing The Lottery

Such a high value means that gold is a relatively scarce commodity compared to, say, silver, which has its SF value at 22.

During 2019, when this table was released, Bitcoin’s SF value was 25, which means it was scarcer than silver, but not gold.

However, there is one thing to note here. BTC is different to gold and other metals in that their S2F value won’t practically increase much.

Current stock-to-flow value of Bitcoin is around 49, which means the cryptocurrency has only gotten scarcer over the years.

The reason behind BTC’s S2F value sharply going up is the halving (where flow is halved). With each halving, the coin will continue to get scarcer.

Now, here is how the S2F value correlates with the price.

Model price (USD) = exp(-1.84) * SF ^ 3.36

The model is based on the above formula. This is how the chart was generated. Looking back at which, in 2019 almost the same amount of deviation was observed as in 2021 right now.

Related Reading | A Never Wrong Bearish Bitcoin Signal Just Triggered

The 2019 price went back in line with the chart shortly after, while it remains to be seen whether the same will happen this time.

Bitcoin Price

At the time of writing, BTC‘s price is around $33k. It’s down about 5% in the last 7 days, and almost 8% in the past month.

Bitcoin price

BTC seems to be going down again | Source: BTCUSD on TradingView

Bitcoin seems to be in a bear market right now, but if the S2F model holds true, the price should go up soon to remain in line with it. The next few months will be a real test for the method.