In a recent article, Could Bitcoin’s Bull Market End Next Month?, I projected market expectations for bitcoin’s price into the future and compared the results to historical indicators of market cycle peaks.
If those expectations come true, we will peak next month at approximately $90,000, give or take $10k or so.
Yes, that means the market cycle peak will come next month and possibly not break $100,000.
Mark, you’re nuts. STOCK-to-FLOW says there’s no way that can happen
Yes, Stock-to-Flow predicts bitcoin’s price will reach $82,000 in June and stay above $100,000 from July to eternity.
That doesn’t mean it will happen exactly the way Stock-to-Flow says it will. The Stock-to-Flow model can fit a fairly wide range of prices.
Look at this chart, courtesy of LookIntoBitcoin:
Do you see the squiggly line at the bottom? That shows you how much bitcoin’s price has strayed from Stock-to-Flow’s predictions over time.
When the line hits the black line, that means its price is aligned with Stock-to-Flow. As the line moves away from the black line, that means bitcoin’s price is deviating from Stock-to-Flow.
You can see it more clearly on this chart from Glassnode:
Bitcoin’s price has gone 4x higher and 70% lower than Stock-to-Flow for weeks at a time, and sometimes spends months at prices 50% below and 2x higher than the model predicts.
The new version of Stock-to-Flow, S2Fx, offers a similarly wide range of prices that fit the model.
We’ve done it before
There’s no reason we can’t zoom to $90,000, hit a market cycle peak, crash to $30,000, then go up to $100,000 later this year (or even by summer). We’ve seen similar behavior in 2010, 2011, 2012, 2016, 2017, and 2019, though perhaps without the massive euphoria surrounding this latest zoom.
Maybe instead of a bull market that looks like 2016-2017, we get a bull market that’s more like 2013: a market cycle peak in April to cap off a 1.5-year bull run, followed by a massive crash, then a few months of Silicon Valley FOMO that sent prices even higher.
Stock-to-Flow says we can do that. So does S2Fx.
There’s also no reason bitcoin can’t chill around $40-60k for a few months or even crash down to the $20,000s from here. We’ve seen bitcoin make those types of moves in the middle of raging bull markets, all within the range of prices you get with Stock-to-Flow.
Unless Stock-to-Flow is not very good at predicting bitcoin’s price . . .
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Originally published on Voice.com.
Also published on Medium.