While BTC continues to trade at the lower bounds of the model, Bitcoin's stock-to-flow model is once again in the minds of multiple crypto analysts and traders.
Bitcoin model
PlanB, the creator of the model, stated in a Twitter comment earlier today that this is not the first time Bitcoin has tested the lower bounds of the Stock flow model. He explained that Bitcoin traded in this area during the corona virus crash in March 2020 and continues to record all-time highs.
Its precise statement can be found below alongside a chart showing Bitcoin's current position in the stock-to-flow pattern.
The fact that the Bitcoin price is at the lower end of the stock-to-flow pattern is always a bit unsettling, even for me. Will it hold (like March 2019 or March 2020 Covid when I release S2F, or September 2020 when BTC is stuck at $10k) and is this another buying opportunity? Or will S2F be invalid?
In response to another Tweet pointing out that the stock-flow model is already obsolete, PlanB stated that this is not the case yet. According to PlanB, the model was still valid but could be invalidated if Bitcoin continues to trade in the $30,000 price range for a few more months.
PlanB also stressed that all models are prone to failure if there are enough factors to warrant bias.
In a nutshell, PlanB's Bitcoin stock-to-flow model is being tested once again by the downside crypto landscape brought on by Tesla's halting of BTC payments for vehicles and China banning BTC mining in its territories.
As a result, only time will tell if Bitcoin enters a bear market, thus invalidating the stock-to-flow model that has been accurate in predicting BTC's price movements since it was first published in March 2019.
Whether it was revoked or not, the stock-to-flow model has been a useful tool for many, including the CEO of Pantera Capital.
