Bitcoin (BTC) should be worth $ 18,000 or the S&P 500 has to break in, as the analyst behind the stock-to-flow model explained. The stock-to-flow model predicts a BTC price of $ 288,000. In a series of tweets on June 17, PlanB, creator of the stock-to-flow and stock-to-flow cross-asset model, highlighted a correlation between the largest cryptocurrency and the stock market.
Bitcoin versus S&P 500: One has to put back
According to the PlanB, Bitcoin and the S&P 500 are both correlated and co-integrated. The pair’s “R-square” value is 95 percent. Such a strong correlation suggests that Bitcoin as a dependent variable is extremely vulnerable to S&P 500 movements. He also looked at the events in March when Bitcoin fell along with stocks and then recovered. PlanB concluded that the current level of the S&P 500 means that BTC should be worth $ 18,000. The only alternative would be that the stock market itself falls.
“This coincides with the S2FX model: BTC worth $ 288,000 at S2F56 -> That means S&P worth $ 4,300,” PlanB continued in his tweet.
The stock-to-flow model predicts the price development of Bitcoin based on the amount of “new” coins compared to the existing circulation offer. Given that Bitcoin supply is unchangeable no matter how much the miners are involved, the stock-to-flow model assumes that the BTC / USD pair will reach 288,000 by 2024, when the next halving takes place Dollars or more will go up.