A price prediction model that puts bitcoin on track to hit six figures before the start of 2022 is “still in play”, according to its creator.
Pseudonymous Dutch analyst PlanB first published the forecast in June when the price of BTC was below $34,000, and it has remained to within a few per cent of each monthly target since then.
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The cryptocurrency reached $47,000 by the end of August before dipping to $43,000 at the end of September – both prices predicted by PlanB.
Bitcoin’s October closing price of $61,318 was slightly off the $63,000 forecast by the model, but there is renewed hope for the November target of $98,000 after BTC hit a new all-time high above $68,000 last week.
Bitcoin’s latest price rally means it is up more than 300 per cent since this time last year, but it needs to rise in price by a further 50 per cent if it is to fulfil PlanB’s prediction for November.
PlanB’s popularity has risen in tandem with bitcoin’s price in 2021, gaining more than a million followers on Twitter after his Stock-to-Flow (S2F) model proved “amazingly accurate”.
The S2F model divides bitcoin’s supply (stock) with its production (flow) to estimate its market movements over the long term. The cryptocurrency’s in-built scarcity – only 21 million coins will ever exist – combined with its diminishing supply will theoretically see its value increase over time.
His latest prediction success comes from his “worst case scenario” for bitcoin, which puts bitcoin on course to reach $135,000 in December.
The simplicity of PlanB’s S2F model means it is prone to being derailed by “black swan events”, such as a leading economy enforcing a bitcoin ban, or major geopolitical news impacting traditional financial markets.
He told The Independent last month that bitcoin’s price could equally be supercharged by favourable news, such as ETF approval or another country following El Salvador’s lead by adopting it as legal tender.
Other analysts caution investors against relying on the S2F model to predict short-term price movements.
“The model has been accurate to date, but I’d caution against following a model for such a volatile asset class,” said Mostafa Al-Mashita at digital assets firm GDA Capital.
“Bitcoin can unite the global economy through a single asset class, unlike any other. It can outpace and outperform the S2F model at any given moment, [but] we also have kryptonite black swan events that could short term cripple bitcoin.”
