News Desk · 22 hours ago · 4 min read
Bitcoin › Analysis
Analyst: Using model predicting $100,000 Bitcoin to cause FOMO is “irresponsible”
Few in the Bitcoin industry have not heard of PlanB. The pseudonymous analyst, who works at a European institution managing a multi-billion-dollar balance sheet but moonlights as Bitcoin analyst, has garnered tens of thousands of followers and presumably millions of views of his articles and tweets.
The reason: he’s the creator of the stock-to-flow model, an econometrics model that suggests Bitcoin’s value is primarily derived from its level of scarcity, defined by the inverse of its inflation rate.
The model, which has been backtested to have an R squared value of 95 percent (extremely accurate), suggests Bitcoin will have a value of $55,000 to $100,000 after May’s block reward halving.
While PlanB’s model has become popular as many believe it is sound, some have started to push back.
Stock-to-flow model deemed “irresponsible” by analyst
Over the past few days, Hugo Nguyen, a crypto writer and a 2019 resident at Bitcoin development firm Chaincode Labs, has been waging war against those who fully put their faith in the stock-to-flow model.
It began when he said that “anyone using the ridiculous S2F price model and consider flow to be effectively non-zero is just silly,” adding that halvings in the future will be “anticlimatic and increasingly a historical relic.”
He doubled down in a Twitter thread published Apr. 13, explaining that “Bitcoiners who popularize the model [are using] a lazy and irresponsible way to cause FOMO.” He added that he thinks the model is predicated on “2 pathetic data points,” referencing the fact that there have only been two prior halvings, and a “generous margin of error.”
I maybe over my head, but let me say this.
Bitcoiners who popularize S2F price model no longer evangelize Bitcoin based on its technical merits, but a lazy and irresponsible way to cause FOMO. That’s a cop-out. 1/ https://t.co/JWsHur08te
— Hugo Nguyen (@hugohanoi) April 13, 2020
There are other reasons to be optimistic about Bitcoin
Whatever your stance is on the model, Nguyen made is certain that he is far from bearish on Bitcoin. In fact, he’s extremely bullish.
Instead of citing the stock-to-flow model, the former Chaincode Labs resident explained that he’s optimistic about the prospects of Bitcoin for the following four reasons:
- Bitcoin’s sound properties as a form of money
- Its “unforgettable costliness,” referencing miners
- A 99.98 percent server uptime
- And the potential of the Schnorr Signature and Taproot technologies, slated to increase the usability of Bitcoin in many ways, potentially acting as a boon for adoption.
Not to mention, there are macro trends that could favor the cryptocurrency moving forward.
Per previous reports from CryptoSlate, one such trend is the belief of Ray Dalio, CIO of Bridgewater Capital, one of the world’s largest hedge funds, that he expects a “new world order” to be established.
While Dalio himself is bearish on Bitcoin, many see cryptocurrencies as the most sound and likely solution to be the next monetary and technical solution for the world, which is becoming increasingly digital and increasingly fractured and distrustful.
“New technologies rise as old systems break, and often it takes a crisis to reveal the flaws of the old system in full.”
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