Bitcoin Follows PlanB Stock To Flow Model “Like Clockwork”
The anonymous Dutch quant PlanB and his stock to flow model for Bitcoin is gaining traction. We featured him on this site for a first time in October of last year when certain crypto CEO’s doubted his theory and compared his prediction to Moore’s law of computer chips.
By now, he’s made it onto the pages of the Wall Street Journal, the bible of classic finance as well.
According to PlanB, Bitcoin should be compared to other safe have investment assets with limited supply, such as gold or silver, which you need to get out of the ground and into people’s hands. As there is always a certain period needed to get all of the existing supply of a certain investment mined the price will therefore follow a certain path which can be calculated beforehand according to his model.
In essence, for gold it is assumed that the stock to flow ratio is 62, or in other words it would take some 62 years before all gold located in the earth’s crust could be mined and found.
For silver, the stock-to-flow ratio is 22 years.
According to the WSJ, the stock to flow model of Plan B is:
Essentially a way of stating Bitcon’s inflaction rate. By this model, Bitcoin should trade more like gold and silver, Plan B argued. To the trader’s credit, back in 2019 Plan B predicted that the model implied Bitcoin should have a $1 trillion market value and trade at $55,000 some time after May 2020. That prediction was fulfilled Friday.
With all that attention and prediction accuracy in such a large model, no wonder the anonymous Dutch quant made it to the top 10 of Cointelegraph’s top 100 crypto personalities.
Or, as he recently stated:
It is simple. In the old world, your money loses value, because governments debase currencies to fund their warfare & welfare state. In the new world #bitcoin increases in value, because math caps the monetary base at 21M BTC. The new world is eating the old world right now.
In a recent interview with Dutch crypto commentator Madelon Vos, Plan B, who was never shown in the video at any time, advised everyone to read The Bitcoin Standard the book by Saifedean Ammous. I can indeed recommend.
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