The creator of the stock-to-flow (S2F) Bitcoin (BTC) price model says that the upcoming block reward halving will decide if it lives or dies.
In a series of tweets on April 16, PlanB said that he is sticking by the Bitcoin price increasing by “an order of magnitude” in the two years after the May halving.
Analyst looks for fundamental insights from halving
“(In my opinion) #bitcoin 2020 halving will be like 2012 & 2016. As per S2F model I expect 10x price (order of magnitude, not precise) 1-2 yrs after the halving,” he wrote.
“Halving will be make-or-break for S2F model. I hope this halving will teach us more about underlying fundamentals & network effects.”
Stock-to-flow measures the issuance of new Bitcoins each block against Bitcoin’s existing supply, a method which has proven highly accurate in charting price performance.
According to the model’s latest incarnation, BTC/USD should hit $30,000 by the end of 2020.
Bitcoin stock-to-flow chart as of April 17. Source: PlanB/ Digitalik
BTC, macro “will not correlate forever”
Continuing, PlanB responded to queries regarding Bitcoin’s correlation to traditional markets. A key concern among many traders is that a repeat of March could still occur, BTC/USD shedding 60% in a day as stocks crashed.
Highlighting the Dow Jones, PlanB argued that current correlation was the result of the broader coronavirus crisis, and was not a permanent feature for Bitcoin:
“During crisis everything is correlated. What's next is what's interesting. They will not be correlated forever (in my opinion).”
Promising to throw out the stock-to-flow model altogether if it fails to deliver as planned, he added that he nonetheless was not nervous about such a scenario occurring.
Recently, some well-known cryptocurrency figures have criticized the concept, arguing it is simply too optimistic and has created a “cult” which reinforces its prognosis. As Cointelegraph reported, they include Ethereum co-founder Vitalik Buterin and a Bitcoin whale known as J0E007.
“To be clear: I expect S2F-price relationship to hold,” PlanB confirmed.