Bitcoin (BTC) did not “crash” this weekend and is in fact performing exactly as expected, says the creator of the renowned stock-to-flow price indicator, Cointelegraph reported.
In a tweet on March 8, the analyst PlanB said that even though BTC/USD had dropped below $8,000, the downward pressure was actually a non-event.
Sharing the latest version of Bitcoin’s stock-to-flow forecast, he summarized: “#bitcoin S2F chart adjusted for today’s ‘crash’ … nothing really happened, btc still spot on S2F track.”
Stock-to-flow is a measure of where bitcoin should go based on its existing supply – the stock – versus the “new” bitcoins that enter circulation, or the flow. The resulting ratio determines the expectations, which call for BTC/USD to hit $100,000 at some point in 2021.
Prior to May’s block reward halving, which should catalyze price growth, PlanB’s model calls for substantially lower average readings of below $10,000.
At present, the average of the 10-day and one-year stock-to-flow values is around $7,600 – less than $200 below the spot price at press time.
As Cointelegraph reported, stock-to-flow has proved extremely accurate at charting bitcoin’s journey. In spite of this, PlanB has faced criticism in recent times from those who claim $100,000, in particular, is too optimistic.
Defending his reasoning, he argued that those naysayers had both failed to prove that stock-to-flow is wrong and to produce a valid alternative.
At the same time, PlanB noted that bitcoin’s difficulty is set to increase this week, regardless of price action.
Difficulty essentially represents the amount of effort required to validate the bitcoin blockchain, with higher levels implying more miner participation.
“No sign of weakness 2 months before the halving,” he added, describing the roughly 7% hike to new all-time highs as “massive.”
Bitcoin’s hash rate – a rough estimate of implied computing power that miners dedicate to the network – hit all-time highs of its own last week.