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Famous analyst PlanB tweeted his new long-term graph, Bitcoin
The Stock-to-Flow (S2F) model popularized by analyst PlanB has received both initial admiration and subsequent criticism. Recently, the creator of this famous model published Bitcoin Market Phases, his latest long-term graph.
The fundamental result of Bitcoin Market Phases is that the largest cryptocurrency has entered a new bull market from the beginning of 2023. As PlanB explained, the new model is based on only one variable on the chain. However, he does not disclose which metric he is referring to.
The analyst then adds that Bitcoin Market Phases, like Stock-to-Flow, is not a predictive or valuation model. Its sole purpose is to try to determine (detect) which stage Bitcoin is in the market cycle. PlanB emphasizes the advantages of his new model in a simple way:
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“Bitcoin Market Phases is my favorite graph after Stock-to-Flow because it is very simple, intuitive, and useful.”
The basic assumption of Bitcoin Market Phases is that every market (including cryptocurrencies and Bitcoin) moves in cycles. Moreover, these cycles are based on mathematical and fractal similarities, which are only a quantitative representation of human psychology.
The analyst explains, “The emotions associated with the stage of the cycle can tell you something completely different; so it is important to know which cycle stage you are in.” Therefore, the idea of Bitcoin Market Phases graph is to encourage its followers to be careful that the market often shows something fundamentally different from our emotions.
PlanB’s new model is very simple and assumes 4 consecutive stages of the market cycle:
Early bull market (blue)
Late bull market (green)
Early bear market (yellow)
Late bear market (red)
Looking at the above graph, we see that the late bear market stage ended at the end of 2022. Moreover, it completed 4 consecutive cycles counted since 2011. PlanB concludes as follows:
“We are not starting a new cycle, so we are currently in an early bull market.”
In addition to presenting his new graph, PlanB also discusses the update of the famous S2F. So far, there have been 3 halvings, and the next one is expected in early next year.
PlanB explains, “Halving causes an increasing scarcity of Bitcoin. Therefore, an increase in the market value of BTC is expected between halvings.”
Interestingly, the famous analyst has created at least 3 S2F versions over the years. The original model was published in 2019 and is based on monthly valuations of BTC and scarcity generated by consecutive halvings. In this model, the current price of BTC is estimated at $55,000.
The other two models are the annual S2F and the so-called Stock-to-Flow Cross-Asset Model (S2FX). According to the former, the average price of BTC in the current cycle should be $100,000. According to the latter, it should be up to $288,000. However, although the current value is significantly different from the current price of Bitcoin, PlanB says:
“I still think that the Stock-to-Flow Cross-Asset Model based on gold and silver is fundamentally the most valuable model.”
However, a few minutes later, he adds that for now, the first, original model is the most accurate. He estimates the average price of Bitcoin in the current cycle to be $55,000.
The analyst assumes that Bitcoin will increase by 100% by 2024. If this happens at some point, the market value will also surpass that of gold. Currently, the market value of gold is about $10 trillion, and the market value of BTC is about 20 times larger.
PlanB notes that the Bitcoin price has reversed and is approaching the values determined by the model. Whenever a halving occurs, the BTC price reflects the value assumed by the original Stock-to-Flow model.
