Everyone is talking about a six-figure Bitcoin (BTC) price now that the digital asset has broken out of its multi-month downtrend and confirmed that a bullish trend is in play. If Bitcoin happens to enter a parabolic move toward $110,000, that would finally match PlanB’s Stock-to-Flow model prediction. According to the pseudonymous analyst, the scarcity and valuation of gold and other precious metals and “Elon Musk’s energy FUD and China’s mining crackdown” are a few of the factors responsible for the past five months of 50% or higher inaccuracy in the model.Bulls’ hopes mostly cling to an exchange-traded fund being approved by the United States Securities and Exchange Commission. Currently, there are multiple requests pending review between Oct. 18 and Nov. 1, but the regulator could postpone its final decision.Oct. 15’s $830 million options expiry was largely impacted by the 20% price rally initiated on Oct. 4, which most likely eliminated 92% of the put (sell) options.Bitcoin price on Coinbase in USD. Source: TradingViewThe aftermath of China’s mining crackdown was an important event that might have fueled investor sentiment, and research shows the U.S. accounting for 35.4% of the Bitcoin hash rate. Furthermore, as Cointelegraph reported, the U.S. states of Texas and Ohio are also expected to receive additional large-scale Bitcoin mining centers, which will effectively boost the U.S. crypto market share even higher.The Oct. 8 expiry was profitable for bullsFollowing last week’s $370 million estimated net profit from the BTC options expiry, bulls had more firepower, and this is evident in this Friday’s $820 million expiry. This advantage explains why the call (buy) options open interest is 43% larger than the neutral-to-bearish put options.Bitcoin options aggregate open interest for Oct. 15. Source: BybtAs the above data shows, bears placed $335 million in bets for Friday’s expiry, but it appears that they were caught by surprise, as 92% of the put (sell) options are likely to become worthless.In other words, if Bitcoin remains above $56,000 on Oct. 15, only $36 million worth of neutral-to-bearish put options will be activated on Friday’s 8:00 am UTC expiry.Bulls have a reason to push BTC price above $58,000Below are the four likeliest scenarios for Oct. 15’s expiry. The imbalance favoring either side represents the theoretical profit. In other words, depending on the expiry price, the quantity of call (buy) and put (sell) contracts becoming active varies:Between $52,000 and $54,000: 3,140 calls vs. 2,110 puts. The net result is $55 million favoring the call (bull) instruments.Between $54,000 and $56,000: 3,700 calls vs. 1,240 puts. The net result is $130 million favoring the call (bull) instruments.Between $56,000 and $58,000: 4,850 calls vs. 680 puts. The net result is $235 million favoring the call (bull) instruments.Above $58,000: 6,230 calls vs. 190 puts. The net result is complete dominance, with bulls profiting $350 million.This raw estimate considers call options being exclusively used in bullish bets and put options in neutral-to-bearish trades. However, investors might have used a more complex strategy that typically involves different expiry dates.Bears need a 7% price correction to reduce their lossIn every scenario, bulls have absolute control of this Friday’s expiry, and there are a handful of reasons for them to keep the price above $56,000. On the other hand, bears need a 7% negative move below $54,000 to avoid a loss of $235 million or higher.Nevertheless, traders must consider that during bull runs, the amount of effort a seller needs to pressure the price is immense and usually ineffective. Analytics point to a considerable advantage from call (buy) options, fueling even more bullish bets next week.The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
Renowned quantitative analyst PlanB is revealing what he thinks the end of this year will bring for Bitcoin, and how much longer the current crypto bull market can last.
In a new interview with Anthony Pompliano, the pseudonymous analyst known for being the first to apply the stock-to-flow (S2F) model to Bitcoin says that he’ll be caught off guard if BTC remains below the six-figure mark by the end of 2021.
Creator of the popular Bitcoin price prediction chart “stock-to-flow”, PlanB, puts $135k target for BTC by December 2021.
What Is The Bitcoin Stock-To-Flow Model?
The BTC stock-to-flow (S2F in short) method is a price prediction model popularized by PlanB. S2F is based on the ratio between the stock (current supply) and the flow (annual production).
It’s often thought that PlanB is the creator of the S2F model itself, however, that isn’t the case. The method has been used in the past for other assets like gold and silver, but PlanB was the first to implement it for Bitcoin. In this way, PlanB is the creator of the Bitcoin S2F chart, although not the core concept itself.
The stock-to-flow value of an asset like BTC shows how scarce it is. The model relates this value with the price and gives a prediction based on that.
Here is the latest price chart based on the S2F model for BTC:
Bitcoin price according to the S2F model | Source: buybitcoinworldwide
As is visible in the above chart, the method has been remarkably close to the real thing in its predictions. Although there have been a few points of deviation, the price has always eventually aligned back on the curve.
Related Reading | Bitcoin Jumps 10% In 24 Hours, Dead Cat Bounce Or Real Move Ahead?
PlanB Thinks BTC Could Reach $135k By December
At the start of the month, PlanB listed out their Bitcoin targets in a Tweet. Earlier, the analyst had targets of above $47k for August and above $43k for September, both of which the tweet confirms have been met.
Next targets for the S2F popularizer include more than $63k for October, above $98k for November, and finally at least $135k for December.
According to the S2F model, Bitcoin should reach $100k by December and these targets seem to be in line with that.
Reaching $100k by December will be a make or break moment for the famed price prediction model as the month is only a couple of months away now. At the moment, BTC’s price floats around $47.6k, up 10% in the last seven days.
Related Reading | TA: Bitcoin Turns Green, Why BTC Could Soon Breach $50K
Here is a chart showing the trend in the price of BTC over the last five days:
BTC’s price seems to have flattened in the last few days after a sharp move up | Source: BTCUSD on TradingView
Bitcoin volatility had seemed to have made a return over the last few weeks as the price showed a lot of chaotic movements over the month of September.
But the coin’s value has again flattened now and it’s unclear when a move in either direction will happen. Though if the S2F model is anything to go by, a move up will need to happen soon.
Bitcoin (BTC) was keen to retain $44,000 on Oct. 1 as the monthly close sparked a late show of strength.BTC/USD 1-hour candle chart (Bitstamp). Source: TradingViewBTC monthly close matches PlanB predictionData from Cointelegraph Markets Pro and TradingView followed BTC/USD as it first returned to the $44,000 mark Thursday, then test lower levels before heading even higher.While still not tackling resistance at $45,000 and higher, Bitcoin did not disappoint with its end-of-month performance, this almost exactly matching predictions from stock-to-flow model creator PlanB for a second month running.Aug >47k✅Sep >43k✅Next targets: Oct >63k, Nov >98k, Dec >135k pic.twitter.com/C45nfQkQSC— PlanB (@100trillionUSD) October 1, 2021With $63,000 now planned for October, expectations were high for Bitcoin to make up for lost ground going into Q4.”September was bad. October is great. November is great. December is great,” Cointelegraph contributor Michaël van de Poppe summarized, telling Twitter followers to “buy the f*cking dip.”Van de Poppe highlighted historical performance across various months each year, something which Cointelegraph previously noted all but consigned September to be a “boring” 30 days.Others, however, were more cautious. In its latest market update, crypto trading firm QCP Capital said that it would remain cautious in its approach to the market as a whole.”Overall, we struggle to find any directional conviction amidst the macro and market crosswinds. Our strategy going into Q4 is to remain fairly neutral and nimble,” executives summarized.Macro factors at play were China’s reiteration of its crypto crackdown and two United States issues: legislation and the potential approval of a Bitcoin exchange-traded fund (ETF).On Friday, a vote on the government’s infrastructure bill, originally slated to happen Monday, was again delayed after a shutdown later this month was averted in a separate vote.Ethereum returns to $3,000Altcoins meanwhile saw another 24 hours of modest to flat moves, again headed by Binance Coin (BNB) on 6% daily gains.Related: Bitcoin ‘FOMO rally’ long overdue that could see BTC price top $200K — Bobby LeeAll of the top ten cryptocurrencies by market cap were in the green at the time of writing, however, marking a refreshing contrast to recent action.Ether (ETH), the largest altcoin, traded above $3,000 on the back of 3% returns.ETH/USD 1-hour candle chart (Bitstamp). Source: TradingView
PlanB, the popularizer behind the Bitcoin S2F method, says the model predicts BTC will break $100k by this Christmas.
The Bitcoin Stock-To-Flow Model
According to PlanB on Twitter, the BTC stock-to-flow (or S2F in short) model predicts that the cryptocurrency is on its way to break $100k by Christmas.
The S2F model is a method to predict the price of an asset based on the ratio of the stock (supply) to the flow (annual production).
PlanB is commonly known as the originator of the model, which is, however, not true. The method was already used for other assets like gold or silver before the analyst only popularized it for Bitcoin.
The S2F value of an asset can show how scarce the commodity is. The model uses a formula to relate that value with the price of the asset, which in this case is BTC.
Related Reading | Ethereum Issuance Drops Below Bitcoin’s For the First Time, Why This May Lead to a New Rally
Now, here is a chart that shows the trend of BTC’s price vs what’s predicted by the model:
Along with the S2F model, the Time Model is also depicted | Source: PlanB
As the above graph shows, the Bitcoin price as predicted by the model seems to be remarkably close to the real thing so far.
There are a few points of deviation, but the overall trend seems to be quite similar. Now, if the price follows the pattern going forward, BTC’s value should go up soon, reaching over $100k by Christmas.
Related Reading | Stablecoins Reserve Hits A New ATH, What Does It Mean For Bitcoin’s Price?
Besides the S2F model, there is also the curve for the Time Model in the chart. This “Time Model” is a method that takes into account diminishing returns and lengthening cycles while predicting the price.
According to this other model, the price should be around $30k by Christmas. PlanB, however, believes that this method underestimates Bitcoin’s value, and the S2F model is more accurate.
At the time of writing, Bitcoin’s price floats around $47.8k, down 4% in the last 7 days. Over the past month, the cryptocurrency has increased 14% in price.
The below chart shows the trend in the coin’s value over the last three months.
BTC’s price catches a downtrend | Source: BTCUSD on TradingView
After breaking above the $49k price mark again yesterday, Bitcoin has started to sharply fall down. It looks like the cryptocurrency is in a range market right now as the coin’s price continues to swing between $45k-$50k.
It’s unclear where BTC might head next, but if the S2F model holds any weight, the crypto might be moving big soon in order to reach $100k by Christmas.
Featured image from Unsplash.com, charts from PlanBTC.com, TradingView.com