Crypto Currency News

Don’t be scared by price adjustments – this indicator suggests Bitcoin to $ 100K in 2021

Bitcoin, after setting its new all-time high of $ 62,000, fell back to $ 54,000 in several hours and caused the forced liquidation of a total of $ 1.74 billion of Bitcoin positions.

Unlike the last few occasions, the 6% drop did not scare many investors. Bitcoin believers on Twitter claim that this is another good opportunity to rack up cheaper Bitcoins. Many of them get their trust from analyst Plan B’s Stock to Flow (S2F) model. The S2F model has made some accurate predictions of Bitcoin’s price movement in recent years.

Based on the S2F model, Bitcoin is expected to hit $ 100K by the end of 2021 and S2FX (an updated version of S2F) is targeting $ 288K.

What is the Stock to Flow model?

The Stock to Flow model measures the abundance of resources. Its ratio is the amount of a particular resource that is held in reserves divided by the amount of its annual production.

Take Bitcoin as an example, Bitcoin has a limited supply of 21 million, and now around 18 million Bitcoin have been mined, which means there are only less than 3 million Bitcoin left to go into circulation. The Bitcoin mining algorithm determines that Bitcoin will go through a halving process every time 210,000 blocks are mined, and this process takes place approximately every four years. In the S2F model, the total reserve is 21 million and the amount produced annually for this halving cycle is 2,625 million. The higher the ratio, the higher the long-term value of an asset.

As for the S2F cross asset model (S2FX), time is eliminated and other factors are added to allow the evaluation of other assets such as gold and silver.

Tags

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button
Close
Close