Introduction
What would be your reaction if in March 2019 (crypto market capitalization at that time is about 130 billion dollars and Bitcoin price drops to $3800 on covid news and others) you got your hands on an article calculating the price of BTC at 55,000 dollars already for May 2020? One hundred thousand per coin in 2021 and a million in 2030? At the same time, this is not just a text in a magazine, but a scientific work.
This article has become a real plan for many, Plan B!
PlanB is the pseudonym of an independent researcher and analyst who gained popularity in the cryptocurrency community for his Stock-to-Flow (S2F) model applied to Bitcoin. This model became known after the publication of his research in March 2019 on the Medium.com, the article came out with the title "Modeling Bitcoin Value with Scarcity " (Modeling the value of Bitcoin taking into account limited emission).
The theory of stock-to-flow PlanB is based on the economic principle of the relationship between the volume of the current stock of the asset (stock) and its annual growth (flow). In the context of Bitcoin, this reflects the relationship between the total number of Bitcoins that have already been mined (stock) and the new coins that are added to the network through the process of "mining" (flow). This model is used to predict Bitcoin price trajectories. The halving process, the halving of awards, plays a significant role in the analysis miners, the author also points out in one of the paragraphs that the model does not take into account the factors of regulation by state institutions and manual management, which can affect the price at some stages of its movement.
With the help of the S2F model, PlanB tries to understand and predict the price movements of Bitcoin, using the relationship between its limited quantity, the volume of "mined" and time. His analysis indicates that an increase in the limited supply of Bitcoin can affect its price, creating a model that predicts a rise in the price of Bitcoin in the future.
EMH and Bitcoin
In January 2020 the next article from PlanB is published – «Efficient Market Hypothesis and Bitcoin Stock-to-Flow» (Efficient Market Hypothesis and Bitcoin Stock-to-Flow Model). In his calculations, the scientist adds the Efficient Market Hypothesis, this is how he describes it:
"EMH ( Efficient Market Hypothesis ) is a well-known theory in financial economics. The EMH is based on the ideas of Friedrich Hayek (Nobel Prize 1974) and others. According to Hayek, markets are information processing systems that provide the best price determination»
Article from PlanB "Efficient Market Hypothesis and Bitcoin Stock-to-Flow Model" presents an interesting look at the relationship between the efficient market hypothesis and the stock -to- flow model for Bitcoin. The author analyzes how these two concepts can affect the development of the cryptocurrency market. PlanB conducts an analysis and comparison of the stock-to-flow model with the concept market efficiency, identifying possible connections and differences between the two. It explores how the S2F model can explain Bitcoin price movements and how it relates to the market efficiency hypothesis. The article is worth a look for those interested in economic models and their application in the world of cryptocurrencies It offers a new perspective on the cryptocurrency market and its possible connections to economic concepts, giving readers a deeper understanding of the relationships between various aspects of the Bitcoin market.
Stock-to-Flow
"In science, the important thing is not so much to obtain new facts as to discover new ways of thinking about them” William Lawrence Bragg
This is how the article "Bitcoin Stock-to-Flow Asset Model" from PlanB, which came into the hands of readers in April 2020, is an important contribution to the development of the analysis of Bitcoin price trajectories. PlanB uses a unique stock-to-flow model to predict the price movements of this cryptocurrency. In its third article, PlanB examines the concept of the stock-two-flow model through the lens of assets. He adds silver and gold to his analysis, creating "BTC S2F Cross Asset (S2FX) Model", which allows the valuation of various assets, including silver , gold and Bitcoin, according to a single formula. This article allows you to enrich the understanding of the stock-to-flow model, demonstrating its application to various assets and creating new opportunities for their valuation market value. The author successfully explains how phase transitions occur in Bitcoin and other assets, which can contribute to a better understanding of price trends. PlanB opens new horizons in understanding the cryptocurrency market through a new look at the stock-to-flow model, which makes his research interesting and significant to the cryptocurrency community.
Conclusion
The S2F model has sparked debate in the cryptocurrency community. Some support it as a useful tool for analysis, while others question its accuracy given the complexity of the cryptocurrency market and a number of other factors that can influence prices.
PlanB contributed significantly to the development of Bitcoin through his analytical research and the Stock-to-Flow model. He created an innovative method of analysis that allowed not only to predict the price trajectories of cryptocurrency , but also to explain them based on the relationship between the amount of already mined Bitcoin and their annual growth. Known for his S2F model, he contributed to increasing attention to the fundamental aspects of Bitcoin , promoting the understanding of the importance of limitations in the production and circulation of this cryptocurrency. PlanB has provided a new perspective on price processes in the cryptocurrency world, paving the way for further research and discussion in this area.
