Is Bitcoin (BTC) Stock to Flow (S2F) Model heading for a failure?

Published July 20, 2021 | Updated July 20, 2021

bitcoin

Is Bitcoin (BTC) Stock to Flow (S2F) Model heading for a failure?

Bitcoin price has slumped to a new monthly low under $30k earlier today and currently struggling to get past the $30K price. At a time when most of the market metrics indicate dominant bearish sentiment, a very popular Bitcoin price model is looking to deviate from its predicted BTC price.

The Stock-to-flow model that traces Bitcoin price as per its scarcity was well on course of its predicted target of near $100,000 by the end of this year, but the market crash of May has brought about a crucial deviation in the pricing model as it stands at a crucial price channel break.

The break of the support channel will indicate a significant deviation from the predicted price model which many claims would invalidate the model. However, it is important to note that the price has deviated from the predicted course on a number of occasions in the past as well.

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Plan B’s S2F model has faced criticism in the past

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The S2F model which maps out an asset’s price based on its scarcity has been often sidelined by many as not so robust formulas to calculate the price trend. Many critics point towards the exclusion of the demand factor as it only takes into consideration the limited 21 million supply.

The model worked pretty well during the peak of the bull run but started to deviate as soon as the market momentum turned bearish. However, now even Plan B the creator of the model is unsure.

The top cryptocurrency has failed to recover from its May crash that wiped out nearly a trillion from its market cap. Many crypto proponents have predicted Bitcoin end of year price targets in the range of $75K-$100K but looking at current market momentum BTC fears another sell-off.

The top cryptocurrency has lost the $30K key on-chain support for the second time in two months and fears dropping to a 5-month low if it fails to reclaim $30k soon. The next key support zone for BTC lies in $24k-$27K with $26.5K being critical support as this level saw 170K BTC purchase.

Disclaimer
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
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Prashant Jha 792 Articles
An engineering graduate, Prashant focuses on UK and Indian markets. As a crypto-journalist, his interests lie in blockchain technology adoption across emerging economies.
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