The Bitcoin (BTC) price should be at $18,000 right now, or the S&P 500 should fall, says the analyst behind the model that predicts a BTC price of $288,000.
In a June 17 tweet series, PlanB, the creator of the stock to flow (S2FX) and stock to flow (S2F) cross asset model, highlighted a correlation between higher cryptomoney and the stock market.
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Bitcoin vs. S&P 500
According to PlanB, both Bitcoin and the S&P 500 are correlated and co-integrated, with the „R-squared“ value of the pair at 95%.
Such a large correlation suggests that Bitcoin, as a dependent variable, is extremely susceptible to the movements of the S&P 500.
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Highlighting the events of March, when Bitcoin fell in line with stocks and then recovered, PlanB concluded that the current level of the S&P 500 implies a BTC price of USD 18,000. The only alternative is for the stock market itself to fall.
„This is consistent with the S2FX model: $288K BTC in S2F56 -> implies $4300 S&P,“ he continues elsewhere in the tweet.
Bitcoin vs. S&P 500 through halving cycles
Stock to flow predicts Bitcoin’s price performance based on the amount of „new“ coins entering circulation versus existing supply.
Since Bitcoin supply is immutable regardless of the interest in mining, Stock to Flow theorizes that by 2024, the next halving of Bitcoin, BTC/USD will reach USD 288,000 or more.
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Bitcoin is like a super-leveraged stock position?
Although PlanB indicated that the relationship is nothing new to Bitcoin, the reminder is timely, as last week Bitcoin again showed a tendency to follow stock movements.
The situation is complicated by coronavirus measures, quantitative easing, or QE, which inflates the money supply, driving both stocks and Bitcoin, he said.
At the same time, stock markets are increasingly subject to intervention in the form of artificial competition from central banks buying up worthless shares.
This has led to suspicions from commentators that the upward movement of recent months is pending a correction, perhaps in two weeks‘ time.
Bitcoin is still a long way from „decoupling“ from macro forces.
„Yes, it implies that BTC is not an uncorrelated asset. As I said in that September 2019 tweet, „the real test is a stress situation. I suppose with the Crown we have had such a test: BTC does not appear to be uncorrelated,“ says another PlanB comment.
„In fact, Bitcoin Lifestyle seems to me to be an S&P position leveraged to the 416x.“