Bitcoin, the main cryptocurrency, lost 20% of its value after Tesla announced on May 12 that the electric car company would not accept bitcoin for purchases. Two days later, the creator of the famous cross-asset-to-flow (S2FX) pricing model, Plan B, shared his model and said that the S2FX was still “intact”. Plan B still shows confidence in bitcoin’s bull run and expects another 5x over the next six months.
The S2FX price model is still “intact”
Despite the recent downturn in the crypto market, Plan B still looks positive that bitcoin’s bull run isn’t quite over. “Plan B” is a pseudonym used by the Twitter account @100billionusd and also the creator of the popular stock-to-flow (S2F) price model. This particular model takes advantage of a bitcoin scarcity ratio (BTC in circulation) to BTC episode. At the time of writing, the Bitcoin network’s annual inflation rate is around 1.77% and will continue to decline over time.
Plan B first published its paper called “Bitcoin Value Modeling with Scarcity” on March 22, 2019. The stock-to-flow model, or S2F, quantifies scarcity similar to assets like gold and silver. It takes it BTC in circulation and divides it by the annual emission rate. When Plan B published this article, Bitcoin (BTC) had a market capitalization of $70 billion and today the market valuation is $844 billion. Additionally, Plan B has updated the S2F model and now calls it the “BTC S2F Multi-Asset Model (S2FX).”
“The S2FX model allows valuing different assets like silver, gold and BTC with a single formula”, Plan B Description S2FX Explain.
The day after Tesla announced that it was not accepting BTC for buys, Plan B took to Twitter sharing an S2FX chart and noted: “S2FX intact…this is starting to look like the bull market of 2013.” The next day, Plan B shared another graphic and gave his 467,000 Twitter followers another S2FX update:
The net result (after Turkey ban, US tax FUD, Faketoshi lawsuit, Elon/Tesla energy FUD) is that bitcoin is 5x higher than it was about 6 months ago. And the data from the S2FX + onchain model indicates that we are only halfway through this bull market. I wouldn’t be surprised to see another 5x in the next 6 months.
Crypto Fear & Greed Index Hits 1-Year Low, Momentum Indicator Shows “Typical Mid-Cycle Bullish Declines,” According to Plan B
Additionally, on May 17, the Crypto Fear & Greed Index (CFGI) shows a score of 27 indicating “fear” and the sentiment is the same as it was over a year ago today.
The index, a metric that “analyzes emotions and sentiments from different sources and aggregates them into a single number,” hit that same region on April 28, 2020. CFGI data 30 days ago shows that the sentiment analysis was “extreme greed”. or a score of 76. Seven-day stats show the CFGI score was 72 or “greed.”
On Saturday, Plan B discussed bitcoin’s Relative Strength Index (RSI) and its thoughts on the next few months. The technical analysis tool called “Relative Strength Index” (RSI) is basically a momentum indicator that can help analysts define oversold or overbought conditions in a market.
“Bitcoin Relative Strength Index (RSI),” Plan B said while sharing another chart. “We are on the typical bearish mid-RSI up cycle (yellow circles), between 2013 and 2017. Excited about [the] the next two months,” added Plan B.
What do you think of Plan B’s current market valuation? Let us know what you think about this topic in the comments section below.
Jamie Redman is the News Manager at Bitcoin.com News and a fintech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He is passionate about Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written over 5,000 articles for Bitcoin.com News about disruptive protocols emerging today.
Image credits: Shutterstock, Pixabay, Wiki Commons, Plan B, Twitter, Crypto Fear & Greed Index
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