Stock to Flow Forecast Holds Strong for BTC

By Nicolas Abington | Crescent City Capital Market Analyst Intern

Bitcoin has gone through a turbulent new year as new crypto legislation is enacted, geopolitical tensions increase, and the halvening on May 12 becomes even closer. Many traders in the market are attempting to predict how to profit off this using a multitude of different indicators, some proving effective, and others ending up in tragedy. 

One forecast has been reigning supreme throughout the turmoil which is Plan B’s stock to flow ratio analysis. The analysis is based on the scarcity of Bitcoin being the primary driver of its value, which you can find out more about with my previous post here. The forecast has predicted time and time again where BTC’s market cap will be with at most a 10% variance between the predicted and actual amount. For example, as of writing, BTC/USD is trading at $8321 while the predicted amount is around $8600.

There are still doubts however for this miracle forecast. Traders are worried about the halvening resulting in a “miner capitulation death spiral” due to the rewards from Bitcoin mining being cut in half. Others are worried about futures manipulation by whales in the market or just the general manipulation by huge bag holders. 

Unfortunately, these risks can’t be confirmed or denied until we become closer to the actual date of the halvening. With that being said these risks don’t disprove the past predictive nature of this indicator and should be heavily considered when doing future analysis of Bitcoin price prediction. Facing all the risk that the crypto market provides, the best that traders are able to do are to update their indicators appropriately and stay diligent in their trading protocols.