The stock-to-flow (S2F) model is the brainchild of crypto analyst going by the twitter handle ‘PlanB.’ It was initially published in March 2019 and examines the relationship between the production of supply and the current stock available, essentially calculating Bitcoin’s value through scarcity.
The model has mapped Bitcoin’s price with a high degree of accuracy, following three halving events now. In 2012 and 2016, BTC price lagged somewhat before entering a large bull market in the subsequent years. The 2020 halving year is playing out the same way so far with a large run predicted for 2021 if history rhymes. It’s worth noting that the model targets a price of $55,000.
Third Red Dot Posted Higher
The third red dot has been printed, and it is higher than the previous two, with a current level of $11,850. It should be noted, though, that the monthly close for August has yet to be completed, and this dot is going on current prices. The analyst has targeted the December 2017 high as the next hurdle to overcome.
“3rd red dot (currently $11850) above 2d red dot (bitcoin July close $11356) and above 1st red dot (June close $9132)… next target: Dec 2017 ATH close $14K”
At the moment, that seems a way off with a gain of just over 66% required to get there from current levels. However, considering BTC went from $5,000 to $20,000 in just two months in late 2017, nothing is out of the question.
Before any of this happens, a higher high from 2019’s peak of just under $14,000 is needed, so breaking above $12,000 is the essential next move.
Bitcoin Flows to Exchange Higher
Fellow analyst, ‘CryptoWhale’, has observed that using metrics from Binance and Coinbase, BTC flows to exchanges has increased just as it did before the mid-March market crash that sent prices tumbling back below $5k.
Data Indicates large amounts of $BTC being sent to Exchanges by big players in the market.
This is exactly what happened right before the March Crash, and was the main Indicator I used when shorting the market. pic.twitter.com/1CDYz5WxKO
— CryptoWhale 🐋 (@CryptoWhale) August 17, 2020
The analyst added that it appears to be the case whereby the BTC whales have profited nicely over the last few months, and are now starting to send their digital assets to exchange in preparation to sell.
The March crash was largely brought on by pandemic panic as it affected stock markets in addition to crypto markets, so this time could be different. The observation is only for comparison and the data shows that as much as $2.6 billion is on the move.
A bigger move could be on the cards or BTC, and while it may drop in the short term, the S2F model still calls for larger long term gains.