During a recent publication, PlanB stated that its three valuation models work optimally when analyzing Bitcoin.
In a recent post on X (formerly Twitter), PlanB states that its Bitcoin valuation models are working optimally. Despite the stumble of the S2F model in 2021 with the non-arrival of BTC at $100,000, he emphasizes that they are not perfect.
In simple words, this expert’s predictions, like those of any other, are not completely certain, but approximate. As for the PlanB models, it must be said that they are among the most accurate despite the aforementioned flaws that they could have in some specific cases. It should not be lost sight of that the price of BTC moves according to the market mood, something that complicates predictions.
In any case, the analyst highlights that his three models, which he has been developing for five years, are performing well. These models are the already mentioned stock-to-flow (S2F), time model and difficulty model. “I’m still amazed at how well they track,” he explained.
The Three Models At Work
The first of these models focuses on scarcity and price jumps related to halvings. The second with adoption over time and the third with KWh-$ arbitrage.
PlanB’s post on X explained it in detail as follows:
“I have been making these 3 bitcoin valuation models for 5 years now, and it still amazes me how well they track:
1) time model (light blue): adoption over time
2) stock-to-flow model (dark blue): scarcity and price jump around halvings
3) difficulty model (red): kWh-$ arbitrage.”
Controversy around Bitcoin’s Valuation and S2F
Predicting the valuation of Bitcoin or another asset that depends on the market mood is a complex task. In 2021, PlanB claimed that the S2F model indicated that the exchange value of the currency would reach $100,000 per unit. However, the price stopped long before that threshold.
Although the forecast failed quantitatively, it did not fail qualitatively. Precisely, this is explained by the analyst himself in a response to a comment from a follower. «In 2021 BTC failed to reach 100K. The model did not fail. In fact, S2F correctly predicted the 2020/2021 rally after the halving (when many expected a mining and BTC death spiral). He also predicted that the price will rise again after/around the 2024 halving,” he pointed out.
Although many analysts have lost faith in PlanB’s models, they maintain a notable strength in Bitcoin’s valuation. The expert once again ventures to the numbers projected by the S2F and says in another text that the range of the next bullish cycle will be between $100,000 and $1 million dollars per coin.
Taking all this into consideration, it must be highlighted that no market model is 100% effective. PlanB, defending the models’ tooth and nail, recognizes the latter. “It is certainly not accurate. But it is more or less correct and, certainly, useful to explain value (based on adoption, scarcity and arbitrage),” he admits.
In short, many people jumped ahead of PlanB’s 98K prediction and their Stock-to-flow model for Bitcoin has received a lot of criticism. However, PlanB recently spoke again on X and remains positive about future price developments. The disappearance of FTX is, according to PlanB, only a minor problem. ‘The number of Bitcoin currently in profit is around 55%. This will start to rise again.’
By Audy Castaneda
