Stock to Flow Analyst Sees Bitcoin Trading at $10,000 Before End of Year

  • Many crypto enthusiasts are placing ultra bearish forecasts on Twitter.
  • The stock to flow model suggests that the move down is out of the norm.
  • There’s a strong possibility that bitcoin trades above $10,000 before 2019 expires.

In the last few days, bitcoin has been the subject of bearish calls. Many are calling a drop between $6,000 and $5,500.

Peter Brandt chimed in on the topic. The most followed trader on Twitter said that the head-and-shoulders top for bitcoin doesn’t look valid. But the analyst painted a descending triangle breakdown and indicated a target of $3,905.

Bitcoin printing two possible bearish patterns
Bitcoin printing two possible bearish patterns. | Source: Twitter

While bitcoin appears to be on a technical downtrend, PlanB believes that it is possible for the top cryptocurrency to regain its bullish composure. The analyst’s stock to flow model suggests that the recent selloff is a deviation.

The Stock to Flow Model Is a Compelling Narrative

The stock to flow (SF) model is a method used to predict the value of a commodity like gold or silver by determining the asset’s scarcity. The formula to determine scarcity or hardiness is simple. Get the amount of the precious metal in inventory and divide it by the amount mined or produced every year.

Among precious metals, gold has the highest stock to flow ratio. According to BayernLB, gold has an (SF) ratio of 58, which is significantly higher than the SF ratio of silver, palladium and platinum. Based on this model, gold’s market cap should be close to $10 trillion. Currently, the precious metal is worth $8 trillion.

stock to flow gold
Gold currently leads all assets in terms of the SF ratio. | Source: CCN

While gold may be ahead of the curve, BayernLB predicts bitcoin’s SF ratio would make tremendous gains in six months. The model indicates that the top cryptocurrency would have a SF ratio of 53 after the May 2020 halving. That will put bitcoin at a $1 trillion market cap.

Bitcoin Is Currently Below the SF Value

Using the stock to flow model, PlanB can forecast the…

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