The Stock-to-Flow Model predicts a second Bitcoin bull market leg

According to PlanB, the creator of the much-debated Bitcoin stock-to-flow model, the bull market is far from over.

On August 18, the analyst tweeted an update to the model, indicating that the target white line and on-chain pricing signals indicate that we are still in the middle of this cycle.

The target price for the fourth cycle is well over $100,000, but it could be reached anytime in the next three years if everything goes according to plan. When asked how he arrived at such a conclusion, ‘PlanB’ replied:

Both #bitcoin S2F (white line) and on-chain signal (color, not red yet) still indicating a 2nd leg of this bull market. pic.twitter.com/ZthR7sd0BA

— PlanB (@100trillionUSD) August 17, 2021

BTC Value Through Scarcity

The stock-to-flow (S2F) model was first published in March 2019, delving into the relationship between supply production and available stock, essentially calculating Bitcoin’s value through scarcity.

So far, the model has been fairly accurate during Bitcoin’s lifespan, and its creator continues to believe that prices have a long way to go during this cycle:

“IMO we are going up, first to 100k, then 288k”

Earlier this month, ‘PlanB’ stated that the model was working flawlessly when BTC closed above $41K in July.

In late June, the model predicted that Bitcoin prices would exceed $98K by November, which is now only three months away.

There have been several critics of the methodology used to forecast these massive price increases. The S2F multiple, which compares the actual price to the predicted price, reported a deviation of -0.83 from what it should be.

Stock-to-Flow Multiple (463d)2021-08-16, 23:59 UTC

ln(actual / model)

Actual price: $45,984.72Model price: $105,007.00S2F multiple: -0.83 pic.twitter.com/F7tfEMiRIP

— S2F Multiple (@s2fmultiple) August 17, 2021

Bitcoin Price Outlook

Bitcoin prices have been falling over the last few days. According to CoinGecko, they had fallen 2.7 percent on the day as of press time, to $45,180.

Tradingview has a slightly higher price of $45,800, indicating that Bitcoin is currently hovering around the critical 200-day moving average, which is acting as support.

If the asset continues to fall, it could reach the next major support zone at the 50-day moving average, which is currently around $41K.

On the plus side, Bitcoin must now break through resistance at recent highs just above $48K for the bulls to resume their charge.