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Bitcoin S2F model is flawed

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The popular BTC model S2F model is flawed and the price of the asset is not forecast to reach a six-figure level, said CryptoQuant CEO Ki Young Ju. He also spoke in a recent interview about the declining release of stablecoins, the negative GBTC premium and the potential consequences for the price BTC.

The S2F model is flawed

The Stock-to-Flow model was introduced several years ago and its variations take into account the annual BTC (Flow) offer and the size of existing stocks or reserves (Stock) to determine potential price performance. Forecasts are at least optimistic, with the highest predicting that BTC will reach $ 288,000 by the end of the year.

Although the model has many supporters in the community, it also has a decent share of skeptics. Ki Young Ju seems to be one of them.

“I think the S2F is flawed in terms of demand. This model is based on scarcity and scarcity is on the supply side. Therefore, the current BTC price differs significantly from the price predicted by the S2F model.

For example, BTC’s aggregate reserves for all exchanges have supply / demand side factors. If people want to sell BTC, they send it to the stock market. If not, they (mostly whales) will withdraw them from stock exchanges into manager’s wallets. “

He added that the model could become “more accurate” if the creator of PlanB added more variables to record demand-side factors.

It is worth noting that the model actually provided relatively accurate price movements in the past. PlanB has previously admitted that the price of BTC is not just going up, but when we look at the macro level, it has followed the predicted path. As such, PlanB recently concluded that BTC treads “like a watch” in line with S2F.

GBTC, issuance of stablecoins and the price of BTC

Stablecoins, ie tokens tied to fiat currencies, gold or other traditional financial instruments, have skyrocketed in popularity and supply over the last year. However, emissions have slowed recently. He believes that BTC needs more stablecoins to go to uncharted territory over $ 65,000, which it doesn’t seem now.

The S2F bitcoin model is incorrect

The CEO of CryptoQuant also touched on the Grayscale BTC Trust and its role in the market. The largest active fund focused on BTC has had a negative premium for several months, which attributes it to the competition and hope for the ETF.

“I think the main reason for this negative premium is that people think that BTC ETFs will be approved soon. If ETFs are approved, people no longer need products like BTC Trust. “

Canada has approved three BTC ETFs in the last few months, followed by Brazil. However, the US SEC is still reluctant to do so, although there is no shortage of applicants. Grayscale also announced plans to convert a BTC trust into a BTC ETF and recently hired a new manager to help the company on its way to such a product.

Ju himself noted that corporations like MicroStrategy and Tesla, which bought billions of dollars worth of BTC over the past year, use Coinbase Prime and OTC instead of Grayscale.

All content in this article is for informational purposes only and in no way serves as investment advice. Investing in cryptocurrencies, commodities and stocks is very risky and can lead to capital losses.
BlackRock (IBIT), the Grayscale Bitcoin Trust (GBTC), Fidelity (FBTC), Ark Invest/21Shares (ARKB), Bitwise (BITB), Franklin (EZBC), Invesco/Galaxy (BTCO), VanEck (HODL), Valkyrie (BRRR), WisdomTree (BTCW), Hashdex (DEFI)

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