Some find it unrealistic that Bitcoin reaches $400k, but the PlanB model, S2F talks about this great price, which can come true at any time, the market is unpredictable, and the S2F model has a lot of validity so it expires, It is not an indicator or tool, plus it has a lot of inside information taking into account the best of Fundamental and technical analysis, BLoomberg is offering level 1A information.
Just a point of clarification. In the S2F model, as shown in the article written by fillippone, there is a variance over the expected results:
Q1.
Stephan Livera: I guess the other factor here to think about is that in practice what happens is markets can swing, or it can overshoot and then undershoot. Can you discuss that a little bit?
A1.
PlanB: Absolutely. Maybe when we talk later about the model itself, you’ll see it doesn’t have an accuracy of 100%, of course, because it’s a model; so all those FOMO actions and bull markets and bear fear, it’s all not in there, and you see that in the chart as well. So, the model price is very simple, based on Stock-to-Flow; but the actual market, of course, where fear and greed are playing out, so it overshoots and undershoots. Usually, what you see… “usually,” I mean the last two times… is that the market overshoots 3-10x the model value, but undershoots 50% maximum, so that’s one of the reasons why I thought, “Okay, if we’re at a model value today of a little above $6000, 50% of that $3000 should be the bottom of current bear market. But, yeah, that’s how I see it.
The good thing about the model is that even if we have this divergence, the trend is regression to the mean, so that sometimes we will be above the predicted price and sometimes below, but always going up and down around the predicted price.