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Is Stock-To-Flow Crypto Analysis Still Valid? Coin Bureau Looks at State of Prominent Model

Is Stock-To-Flow Crypto Analysis Still Valid? Coin Bureau Looks at State of Prominent Model


Guy, the host of Coin Bureau, is weighing in on the widely-followed stock-to-flow (S2F) trading model popularized by the analyst known as PlanB.

The S2F has traditionally been applied to commodities like gold and silver. It predicts the performance of an asset based on the idea that the price increases as the asset becomes more scarce. PlanB has used it to predict Bitcoin topping out at about $288,000 this bull run.

 

In a new video, the pseudonymous host of Coin Bureau says that with Bitcoin trading near the $30,000 level – about $83,000 below where the S2F suggests it should be – he agrees with PlanB that the model is in a “make or break” phase.

“There is no doubt that the S2F has been one of the most accurate Bitcoin pricing models around. I actually call myself a fan and have referenced it a number of times on the channel as a vital indicator to watch. However, as prices have diverged, its accuracy appears to have come into question once again.”

However, Guy says he thinks strong fundamental catalysts such as institutional demand will likely push Bitcoin’s price back into the S2F’s favor. He references recent reports of traditional financial institutions expressing interest in the space. He also mentions that whale holdings, or Bitcoin wallets with at least 1,000 BTC, are currently at a two-month high.

The analyst says he’s not looking at the short-term signals from the S2F, but rather its prediction of $288,000 by the end of 2021. He says it’s not a far-fetched scenario.

“What does matter is whether its end-of-year price prediction makes logical sense. I think it does. As we’ve established, price is impacted by numerous other factors that are outside the scope of a simple model. Over the past few months, price has been at the whim of what institutional investors and whales have been doing with their Bitcoin holdings. While there may have been profit-taking from the all-time highs we saw back in May, there is increasing evidence that an accumulation is taking place in hedge fund land. This accumulation demand cannot continue without an accompanied rise in price. It’s just plain economics.”

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Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any loses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.

Featured Image: Shutterstock/Vladimir Sazonov/Sergey Nivens





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