My two favorite bitcoin models:
— PlanB (@100trillionUSD) January 21, 2024
– 2019 Stock-to-Flow model (prediction)
– 2022 Market Cycle model (detection)
Bitcoin is perfectly on track. Patience is key. pic.twitter.com/MdV9DI9c2o
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Bitcoin: PlanB reveals two essential forecasting models
Mon 22 Jan 2024 ▪
3
min read ▪ by
Getting informed
▪
Event
Since its creation in 2009, Bitcoin has not only experienced significant growth but also substantial fluctuations. The result: it is now difficult to predict the price of this cryptocurrency. According to analyst PlanB, there are two models currently available to anticipate Bitcoin’s price evolution.
The stock-to-flow model for predicting Bitcoin’s price
The stock-to-flow model, proposed by analyst PlanB in 2019, compares the stock of existing Bitcoin (BTC) to the flow of new bitcoins created each year. Bitcoin is scarce because there is a limited number of bitcoins that can be mined (a maximum of 21 million). Furthermore, the flow of new bitcoins is cut in half every four years during the halving event.
The stock-to-flow model thus calculates a ratio between the stock and flow of bitcoins. It measures their degree of scarcity. The higher this ratio, the more Bitcoin’s price is supposed to increase.
The market cycle model for detecting Bitcoin price trends
The market cycle model, developed by the research firm Ned Davis Research, analyzes Bitcoin’s price trends based on four phases:
- accumulation,
- uptrend,
- distribution,
- downtrend.
These phases correspond to crypto investors’ behavior, which varies according to their confidence, optimism, or pessimism.
The market cycle model uses technical indicators, such as moving averages, to detect phase changes as well as market reversal points for Bitcoin. This model allows for real-time tracking of Bitcoin’s price evolution and adjusting one’s crypto investment strategy accordingly.
Patience is the key
Bitcoin is also a long-term currency. This cryptocurrency aims to revolutionize the global financial system. This means that one should be patient and believe in its vision. Short-term fluctuations should not be discouraging.
It is also a volatile currency, which can be influenced by :
- regulation,
- competition,
- innovation,
- demand,
- speculation,
- manipulation.
According to several crypto analysts, Bitcoin is perfectly on the right track. Patience is the key to exploiting it effectively.
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Je m'appelle Ariela et j'ai 31 ans. J'oeuvre dans le domaine de la rédaction web depuis maintenant 7 ans. Je n'ai découvert le trading et la cryptomonnaie que depuis quelques années. Mais c'est un univers qui m'intéresse beaucoup. Et les sujets traités au sein de la plateforme me permettent d'en apprendre davantage. Chanteuse à mes heures perdues, je cultive aussi une grande passion pour la musique et la lecture (et les animaux !)
DISCLAIMER
The views, thoughts, and opinions expressed in this article belong solely to the author, and should not be taken as investment advice. Do your own research before taking any investment decisions.