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With nearly 95,000 followers, PlanB is a popular anonymous Twitter user who has committed to cryptocurrencies. It has gained particular fame with its stock-to-flow forecasting model. This includes various factors such as block rewards, current token prices, or fiat currency inflation for calculations.
PlanB appeared in the May 1 issue of the podcast with Peter McCormak, another crypto-influencer. There he described the path of the oldest cryptocurrency from a toy, to reaching the $ 1 mark, to a serious asset worth investing in. He further said that Bitcoin may not even be an asset anymore, but something much bigger. PlanB is convinced that the price of Bitcoin will one day be around $ 1 million.
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PlanB is reviewing its stock flow model shortly before Bitcoin’s halving
On April 27, PlanB published an article detailing a revised version of its stock-to-flow model.
The stock-to-flow model establishes that there is a connection between the hardness of an asset and its price. The hardness is calculated as follows: quantity transported / increase in one year. Bitcoin example: 18,359,500 coins are currently being funded. Every year, block reward * block per year = 12.5 * 6 * 24 * 365 = 657,000 BTC are added. Then the hardness is ~ 28. The hardness increases linearly with the same delivery rate. Bitcoin also doubles its hardness in one go due to the fact that the production volume is cut in half.
PlanB shows in a logarithmic chart image how Bitcoin’s market capitalization has been correlated with its toughness in the past. In the revised version (image above), draw on the self-defined stages of development of the cryptocurrency. In addition, he included gold and silver in the regression line calculation and was able to improve its precision and degree of determination (R ^ 2).
He defines the levels of development of bitcoins as follows:
- Proof of concept: Bitcoin according to white paper
- Payments: Bitcoin reaches $ 1
- E-gold: the first half has taken place, the value of bitcoins corresponds approximately to that of an ounce of gold
- Financial Asset: Second Half Completed, $ 1 Billion Per Day Transaction Milestone Reached, CME Futures / Bakkt
As already explained, the degree of hardness of the cryptocurrency will double to 56 in a few days. If you put the number in the regression line formula in the box above, you will get a price of around $ 300,000 per Bitcoin. A big leap, his old model predicted $ 55,000.
Shaping the past is not too difficult. Find models that are as close as possible to them. PlanB had amazing success with its stock-to-flow model. So good that others, like Bayerische Landesbank, have accepted and discussed his theory. But drawing conclusions about the future is another story.
For Hodler, it’s still exciting for everyone if PlanB is right.
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