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Bitcoin is on track to be one of the year’s best performing assets, despite a recent retraction – but that’s not stopped BTC bulls from fighting on Twitter.
The Bitcoin price has climbed through much of 2020, adding some 40%, with the bullish stock-to-flow model – that predicts a massive $288,000 BTC price before 2024 – working “like clockwork,” according to its anonymous creator.
However, a number of high-profile bitcoin analysts and entrepreneurs have clashed over the stock-to-flow model this last week, with the anonymous PlanB accusing his critics of trying to unmask him and his model derided as “absolutely useless.”
“The [stock-to-flow] model is based on the most fundamental errors which render it absolutely useless,” warned Alex Kruger, an economist and cryptocurrency analyst, speaking over the phone.
The stock-to-flow pricing model, created by anonymous Twitter user PlanB, who claims to be a Dutch institutional investor with a legal and quantitative finance background that manages around $100 billion in assets and tweets from the handle @100trillionUSD, calculates a ratio based on the existing supply of an asset against how much is entering circulation.
Kruger, along with many other analysts in recent months, has warned the model is based on faulty comparisons and a “spurious relationship” between price and scarcity.
“The whole model rests on the wrong assumption that there is cointegration between price and scarcity,” Kruger said, who explained that without cointegration it’s “nonsensical to think that bitcoin stock-to-flow, a number that goes up programmatically, and everybody knows what it will be at any point in time, can be used to predict price.”
Criticism of the stock-to-flow model and its creator have bubbled up recently, with the chief executive of bitcoin buying app Swan Bitcoin, Cory Klippsten, posting what PlanB considered to be identifying information on Twitter before deleting it and saying he was “wrong to post any personal information” about PlanB and adding anonymous bitcoin users “should have the right” to stay anonymous.
“It’s extremely important to be bullish for the right reasons,” Klippsten said via Twitter, explaining his opposition to the popularization of the stock-to-flow model.
“Otherwise you’ll have weak hands when your belief is proven false.” Klippsten, speaking via Telegram, said he supported the stock-to-flow pricing model until just a few months ago when he “looked into the models and realized they’re invalid” and “have zero predictive power.”
According to PlanB, who has disputed the information posted by Klippsten, the stock-to-flow pricing model shows bitcoin will reach $288,000 before the next bitcoin halving in 2024.
PlanB has also argued that assets that have a high stock-to-flow have a high value, pointing to gold, silver, diamonds and real estate in a chart posted to Twitter.
In other trending Bitcoin News today:
Bitcoin Active Addresses Shatters 1,000,000! Bitcoin’s fundamentals continue to show signs of strength.
According to the on-chain data provider Coin Metrics, the number of BTC active addresses has soared to a level not seen in over two years.
“Bitcoin doesn’t have to be complicated. The supply is capped and the number of users has been growing exponentially this whole time.”
Analysts use the active addresses metric to measure the rate of a crypto asset’s adoption.
The metric refers to the number of unique addresses that are active on the network as a sender or receiver of the crypto token.
On September 25th, the number of BTC active addresses skyrocketed to 1.14 million – the highest level since the 2017 bull market.
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