BTC, despite the ongoing uncertainties in its price, has been strongly bullish over the long-term.
This bullishness started at the beginning of 2023 and has seen the flagship cryptocurrency break past $30,000, and then $40,000 before the ongoing waltz under $45,000.
This price action on Bitcoin has now revived interest in one of the most controversial forms of technical analysis, and its creator, PlanB has a few things to say.
The S2F model as we mentioned earlier, is one of the most controversial forms of technical analysis.
The original article about the S2F model was written by PlanB, an anonymous analyst, and was released in March 2019.
According to PlanB, the S2F model works on the concept of Bitcoin's scarcity. Using this factor, the S2F model attempts to predict future prices of BTC based on:
In essence, the higher the S2F ratio, the scarcer and more valuable Bitcoin is.
The S2F model analyzes past data to make these predictions and assumes that there is a linear relationship between the S2F ratio and the value of BTC.
However, a big problem with this is that Bitcoin's price isn't a completely logical system, and is based on other things like investor sentiment, greed and general macroeconomic factors.
This is where things get interesting.
According to PlanB in a recent tweet, the S2F model has a new outlook for BTC.
PlanB says that Bitcoin will enter a new phase after the 2024 halving, which will increase its S2F ratio to 121 and its market value to $5.5 trillion.
Keep in mind that the overall crypto market cap sits at around $1.65 trillion, and BTC has an $864 billion share of the total.
In summary, PlanB's outlook features a $532,000 BTC price per coin, which is more than 10 times its current level.
Keep in mind that when PlanB first wrote the S2F model article in 2019, Bitcoin was still trading at $4,000.
He predicted that Bitcoin would hit $55,000, which was highly bogus at the time because Bitcoin would have had to rise by more than 13 times its original value.
Two years later, in November 2021, Bitcoin beat this prediction and went as high as $65,000 (more than 16 times its value in 2019).
Keep in mind that the S2F has been wrong, as many times as it has been right.
For example, the S2F model has failed to meet some of its previous predictions.
One good instance is how the model predicted that by the end of 2021, Bitcoin would have increased to $135,000.
However, Bitcoin hit $69,000 and failed to go further up. The bears crashed its price down to $42,000 by January 2022, and then to a disappointing $15,000 by December.
The S2F model has been so controversial, that even Vitalik Buterin openly mocked it on Twitter in June 2022.
"[…]I think financial models that give people a false sense of certainty […] are harmful and deserve all the mockery they get" Buterin said.
Overall, only time can tell how high up Bitcoin will go from here, and investors remain as determined as ever, to see things through.
Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information, but it will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.