Stock-to-Flow Model Suggests $115K for BTC in August

By April 26, 2021Bitcoin Business
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Bitcoin keeps shooting higher for the most part. While it suffers from corrective periods such as right now (the asset is presently trading for about $55,000 per unit – roughly $8,000 less than where it was two weeks ago), the currency has managed to maintain a certain level of bullish activity, thereby making it one of the top financial tools of the past two years. Now, a price model for bitcoin known as the stock-to-flow model is suggesting that the currency could hit the $100,000 mark within the next four months.

The Stock-to-Flow Model Is Stronger Than It May Seem

The stock-to-flow model has been somewhat controversial in the sense that it stems not from a well-known figure. Rather, it was first introduced on Twitter through an individual simply known as “Plan B.” However, analysts continue to look at this model and acknowledge that while it may not stem from any serious financial platform, it has not failed to thus far predict bitcoin’s price patterns, and this has caused many industry heads to look at it with a gleaming eye.

At the time of writing, the stock-to-flow model is suggesting that bitcoin could surge as high as $115,000 this coming August. Dan Morehead – the chief executive of crypto investment firm Pantera Capital – explained in a recent interview:

The model suggests bitcoin could hit $115,212 in August of 2021 based on the relative stock-to-flow ratios of the previous two halvings… One potential framework for analyzing the impact of halvings is to study the change in the stock-to-flow ratio across each halving. The first halving reduced the supply by 15 percent of the total outstanding bitcoins. That is a huge impact on supply, and it had a huge impact on the price.

One of the big things that has happened with each halving in the past is that the price of bitcoin always incurs a meteoric rise during the following year. In 2012, BTC was halved and experienced a price explosion in 2013. This same action occurred in 2016, and thus bitcoin rose to a new level the year after. In 2020, bitcoin incurred its third halving, which makes some analysts – like Morehead – believe that the currency will explode by the time we are ready to say hello to 2022.

He goes on to say:

Extrapolating this relationship to 2020: the reduction in supply is only 40 percent as great as in 2016. If this relationship holds, that implies about 40 percent as much price impulse. Bitcoin would peak at $115,212.

Things Are Likely to Improve Even More

For the most part, many members of the crypto community are feeling bullish about BTC. Carlos Betancourt – a principle with the digital asset hedge fund BK Coin Capital – says:

Since Coinbase filed officially for its IPO in late February, the total crypto market cap has risen approximately 45 percent to over $2 trillion.

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