Bitcoin’s price has been dropping hard over the past week. Despite the bloodshed in the markets, one market analyst claims the 17 percent downswing is just a hiccup and does not invalidate their long-term bullish projections.
Popular cryptocurrency analyst PlanB (@100trillionUSD) tweeted earlier today that there was little reason to panic over the recent Bitcoin price dip. They call the drop “normal Bitcoin behavior” and remind followers that the price of the leading digital asset is still up a long way year-to-date.
Some people panicking about this -17% week.
— PlanB (@100trillionUSD) November 22, 2019
Supporting their call for calm, PlanB uses the stock-to-flow model for determining value and applies it to Bitcoin. First detailed via a Medium post from March of this year, quoting Nick Szabo, the analyst claims that, like precious metals, Bitcoin has “unforgeable scarcity”, since it is so expensive to create more of.
This, coupled with the high numbers of Bitcoin hoarded versus its decreasing issuance rate, puts its stock-to-flow ratio in line with gold or silver, as opposed to those metals that have more prominent industrial uses.
PlanB and others believe that Bitcoin’s forced adjustments to its stock-to-flow ratio (halvings) function directly as a price driver. In the Medium post, the analyst acknowledges that some other variables impact the price but concludes:
“… the dominant driving factor [of price] seems to be scarcity.”
Using previous market data and the stock-to-flow model, PlanB has projected Bitcoin’s price performance up to 2027. This covers the next two halving events, during which the supply of new coins hitting the market drops every four years. Currently, at 12.5 BTC per block, the next halving will reduce this to 6.25 BTC. In 2024,…