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PlanB utilises his own Stock-to-Flow strategy to come up with bull run analysis. Discovering why this methodology is not the best option.

Reputable analyst PlanB reported the beginning of FOMO period – bull run market – based on the Stock-to-Flow research.

“Accumulation phase has ended: no more easy buying opportunities in orderly and slowly increasing markets” – wrote PlanB in his post to X.

According to the investor, the market is expected to enter 10-month FOMO, characterised by “extreme price pumps combined with multiple -30% drops”.

Earlier PlanB claimed that Bitcoin will be scarcer than gold and real estate after halving. The presumption was based upon Stock-to-Flow strategy as well.

What Is Stock-to-Flow

The Stock-to-Flow (S2F) model predicts the value of Bitcoin based on the stock-to-flow/production (SF) ratio. It’s main idea – to prove that the price of a commodity will rise due to scarcity caused by an increase in the SF ratio.

The author of the Stock-to-Flow – an anonymous investor PlanB – created the model based on his calculations for precious metals such as silver and gold. Its first introduction took place in the article Modeling Bitcoin Value With Scarcity.

As for PlanB, the author claims to be an institutional investor with 25 years of experience, mainly spread out through finance and law. In one of his write-ups, the trader reports that he has managed multi-billion dollar assets. The identity of PlanB remains unknown up to this day.

How Stock-to-Flow Works

The model works upon Nick Szabo’s idea that the constant short supply of the precious metals and collectibles comes due to the cost of production. This very approach was later adapted to Bitcoin by PlanB.

SF, a key metric of Stock-to-Flow, is calculated equal to the ratio of the asset’s stock to inflows – the inverse of supply growth. The stock equals the full amount of reserves, and the inflow equals the annual production or mining output.

Commodities indicating low SF – ferrous metals, consumables, etc. – are not rare. If their prices increase, producers will simply substantially increase production and eliminate scarcity. For rare objects with high SF, the same approach devours greater cost and resource capacity.

As of the reporting time, the SF of Bitcoin indicates 56.9 on the 10-day timeframe and 55.5 on the 463-day timeframe. The inflow is determined by the reward per block that is about to be decreased amidst upcoming halving event.

The graph uses a logarithmic scale that clearly visualises values from $10,000 to $100 billion. The time until the next halving is shown using a colour gradient. Dark blue corresponds to the month in which the block award decreased and red corresponds to the month following the event.

Earlier, with help of the model, PlanB predicted that Bitcoin’s market capitalisation will be $1 trillion and its price will exceed $55,000 after the 2020 halving.

Stock-to-Flow Deflection Indicator

Consequently, the trading community came up with a Stock-to-Flow Deflection. This technical indicator stands for the ratio between the factual price of Bitcoin and its value, calculated with the SF model.

The indicator functions as follows: if Stock-to-Flow Deflection takes a value less than one, this signals that Bitcoin is undervalued. By contrast, if the parameter exceeds rate one, the value of the cryptocurrency is signalled to fall.

Some traders use this indicator to buy Bitcoin if its value is below the estimated one, and open short positions when the cryptocurrency is overvalued.

Why Stock-to-Flow Is Criticised?

Since the model introduction, it could not get a global foothold in traders’ strategies.

Nico Cordeiro, the chief investment officer and fund manager at Strix Leviathan, believes that “model’s accuracy will likely be about as successful at forecasting Bitcoin’s future price as the astrological models of the past were at predicting financial outcomes”.

He argues that the model’s correlation with USD market capitalisation of a monetary good (e.g. gold and silver) is proofless and goes against Bitcoin’s trajectory.

“This becomes quite obvious when one extends the model into the near future. By 2045, the model estimates each Bitcoin will be worth $235,000,000,000”, writes Nico Cordeiro for Coindesk.

Cordeiro also criticises the naїve application of a linear regression that results in a high probability of a researcher finding “good” statistical results.

“It is common for researchers to underestimate how often such techniques lead to false results. And particularly in this situation, where there is a large degree of freedom for random data to fit a specific outcome.”

The analyst also notes the wrong use of a “scarcity” as a notion and a metric within the model. Namely, PlanB uses “scarcity” to describe an asset’s supply growth rate or new production as measured by the SF metric. This assumes that increasing new supply depresses price through increased selling pressure from producers and vice versa, which has nothing to do with the reality.

The Stock-to-Flow model received criticism from Vitalik Buterin as well. The creator of Ethereum network wrote that “financial models that give people a false sense of certainty” are “harmful and deserve all the mockery they get”.

The statement came in response to Sassal.eth’s feedback on Stock-to-Flow, citing it to be “hopium garbage” and “epic failure”.

From what we can say, Stock-to-Flow, just like any other model, does not take fundamental or contiguous factors into account. In the informational society, the market becomes dependent on it.

Namely, the adoption of Bitcoin ETF, or, presumably, a cross-chain collaboration between WhiteBIT and NEAR Protocol, which envisages increased HOT token mining activity and USDT/USDC usage, may cause a significant impact on crypto and hence reflected on the chart.

Stock-to-Flow Potential

Using the Stock-to-Flow model, PlanB managed to predict the growth of Bitcoin to $55,000.

Moreover, the original mode has been advanced, while it still can’t be used for other assets other than cryptocurrency.

The author of Stock-to-Flow and its followers agree that the exponential increase in the price of Bitcoin will stop, and the model may be less relevant in the future. However, he still assumes Bitcoin’s value will rise due to undervaluation and scarcity.

Bitcoin touches $70,000 and immediately retests amidst the decreased amount of the currency. Is scarcity a key reason?

March 4 set up the market on the thrill rails as Bitcoin (BTC) updated its historical milestone, reaching the price of $68,869.87. Previous ATH was marked on November 10, 2021, when Bitcoin climbed to 66,953.34, according to CoinMarketCap data.

As of reporting time, Bitcoin (BTC) has indicated another ATH by locally tapping $70,000 price.

Among the array of factors supporting Bitcoin’s surge, the scarcity stands out. But what is the trick here?

What Is Causing Low Supply

According to AMBCrypto and CryptoQuant, nearly 50,000 Bitcoins (BTC) were withdrawn from centralized exchanges throughout February, causing a sharp dip in the world’s largest cryptocurrency’s “available to buy” supply.

This caused the drop in Bitcoin’s exchange reverse during the month, even as its market price spiked by 44% at the same time.

Whales Entering the Game

Another significant factor driving the scarcity of Bitcoin is the sharp increase in the number of institutional investors, also referred to as whales in the crypto market.

According to Glassnode, the number of unique entities holding at least 1,000 Bitcoins increased by 4% during February, representing 55 more whales entering the market in February.

No small part in BTC scarcity is played by exchange-traded funds (ETFs). The BitMex Research analytics revealed that as of March 1, spot funds held 776,464 BTC overall that equals to almost 4% of all Bitcoin’s unlocked supply.

The launch of Bitcoin spot ETFs has opened the gates of the crypto market for TradFi investors in the U.S., not to mention their psychological impact. The event led to bullish forecasts and prevailing optimism over the global community, and led to a significant proximity of a mass crypto adoption.

ETFs have also slung the raft of the altcoin market. Seeing that solely Bitcoin gained its positions, the Web3 sector combined the powers prior to potential recognition within the bigtech realm.

The tendency spurred the blockchains’ performance, as indicated by increased TVL rates of Solana, Ethereum, Cardano, and other core chains in 2023. This reflected on high occurrences of cross-chain and interoperability novelties. Most illustrative instances: Base and OP Stack integration, which took place a year ago, and latest WhiteBIT integration with Near Protocol. The latter one is unlocking the ability to mine Near’s HOT token and to withdraw USDT and USDC for free, influencing the performance of 4 currencies at once and equally impacting the market.

It was likely that all investors – not only whales – got motivated to rack Bitcoin due to the aforementioned factors.

Where Is Bitcoin Headed Now?

As of reporting time, Bitcoin retested to $67,439, following the abrupt consolidation, and then recovered to $69,000-$70,000 range. The massive bullish candle for March 6 clearly indicates the sellout of BTC, accompanied by opening long positions for it. This is indicated by Relative Strength Index (RSI) rate, which decreased below 50 in momentum.

The rapid decrease caused vast liquidations as Bitcoin investors lost over $84 million in the past 12 hours. In total, 301,340 traders were liquidated for $1.11 billion over the day.

The sell may trigger the open supply rate for Bitcoin by refilling the previously proposed scarcity with a low intensity.

Why Scarcity Is A Good Thing?

Amid the halving scarcity remains a crucial metric to watch for Bitcoin.

Typically, a drop in exchange supply implies reduced selling pressure and a potential shift towards other activities, i.e. long-term holding.

With more Bitcoins accumulated in the wallets and upcoming halving event, the scarcity in the market is brought on the surface. As per the supply-demand dynamics, this is a major bullish signal.

The cryptocurrency market is constantly evolving. Every day, new integrations, updates, and other important events take place that bring the industry to a new level. Today, we are going to look at the most relevant crypto news that has happened recently.

Ethereum Dencun Update Launched

On March 13, the long-awaited Ethereum Dencun update was released, which attracted the attention of the crypto industry. The majority of the crypto community hopes that this update will be an important step for layer-2 networks, as it will significantly reduce transaction fees and increase Ethereum’s scalability.

A post by the IntoTheBlock on X shows that, except for Ethereum, the other three networks will experience a decrease in the cost of gas after the update is launched.

According to the forecasts, the projected price of Ethereum gas may remain unchanged at $18.75, which will provide stability for users and developers of the blockchain network. However, it is expected that the impact on other L2 platforms will be significant, as the projected price of gas on them will decrease significantly.

The Dencun hard fork contains 9 different suggestions for improving the blockchain. One of the most famous is the one that contributed to the launch of Uniswap v4, the long-awaited update to the popular decentralized exchange platform.

In addition, EIP-4844 guarantees a significant improvement in Ethereum’s scalability by introducing blockchain transactions specifically designed for the layer 2 (L2) networks that benefit from it. And EIP-4788 focuses on strengthening the connection between Ethereum’s executive and consensus layers, which has the potential to improve network reliability and optimize the performance of staking pools.

The update is expected to not only increase the efficiency and scalability of the blockchain, but also lead to an increase in the price of ETH and other tokens associated with L2 projects. This could trigger a new wave of investment in the Ethereum ecosystem, further strengthening its position as the foundation of decentralized finance.

London Stock Exchange Accepts Applications For Bitcoin ETNs

On Monday, the London Stock Exchange (LSE) announced that it will start accepting applications for Bitcoin and Ethereum exchange-traded notes (ETNs) in the second quarter of 2024. The exact launch date will be confirmed later.

The statement said that the exchange will accept applications in accordance with the newsletter.

“In order to mitigate the risk of delay in the admission timetable, the Exchange encourages early engagement from prospective issuers interested in admitting Crypto ETNs to trading on the Exchange,” the LSE added in the admission fact sheet.

In additional, the exchange noted that cryptocurrency ETNs will only be available to professional investors. They stated that the notes must be:

Non-leveraged and backed by Bitcoin or Ethereum;

The underlying crypto assets must be at least 90% held in cold wallets or something similar;

Held by a custodian that is subject to anti-money laundering laws in the UK, EU, Switzerland or the US.

Interestingly, this statement was made at a time when Bitcoin surpassed the $71,000 mark for the first time, rising by almost 70% this year amid massive investment in US exchange-traded funds.

WhiteBIT In Partnership With FC Barcelona Announced A New Educational Course

As part of its cooperation with FC Barcelona, WhiteBIT has announced the launch of a new educational program dedicated to blockchain technology and cryptocurrencies. The course is available on the Barça Innovation Hub platform, which is part of the football club’s ecosystem aimed at promoting modern technologies.

Apart from constantly introducing new training courses for their users, the company also frequently conducts various events and new listings. For example, they recently announced a new pair for trading perpetual futures $HOT-$PERP.

The goal of the course is to broaden the understanding of blockchain technologies and explore their practical application in life. The course explains in detail how sports and cryptocurrency intersect, as well as how it is being integrated into the industry.

The curriculum covers the following topics:

Digital asset classification, a detailed overview of Bitcoin and Ethereum;

Tools for working with cryptocurrencies, including exchanges and wallets;

Fundamentals of crypto trading;

Integration of blockchain technologies into various industries on the example of the sports industry

Practical cases from WhiteBIT reinforce the theoretical content of the course. The first training session started on 10 March 2024. New applications will be accepted every month, and the recommended study time is 6 to 8 hours per week. Barça Innovation Hub and WhiteBIT are also working on a scholarship program for students, which they will announce in the near future.

Dubai Police Use Cardano Blockchain For Investigation

The Dubai Police Force has unveiled a project based on the Cardano blockchain to store and transfer criminal investigation data. The project demonstration demonstrated the secure exchange of forensic data with international security agencies, highlighting the technology’s effectiveness in secure data management.

According to GhostFund co-founder Chris Oh, the police’s choice to use Cardano highlights the potential of blockchain for secure and unbreakable data management.

He noted that “blockchain ensures that data will not be tampered with and can be tracked by various stakeholders.” For example, the technology could make it easier for international parties to securely share sensitive forensic data.

Omar Shands, a security expert, commented on the Dubai Police’s integration with Cardano, noting that blockchain is an extremely valuable tool that is becoming increasingly important in the security sector.

Solana’s Mempool In Jito Stops Operations

On Friday, the developer of the Solana client, Jito Labs, announced the decision to suspend mempool due to “negative externalities impacting users on Solana.”

A mempool is a place where transactions are stored between sending and receiving. The basic Solana framework does not have a mempool, but the Jito team implemented their own based on Jito’s Block Engine.

Thanks to this solution, traders on the network have the opportunity to configure bots so that they outperform other users’ trades and carry out “sandwich attacks”. A sandwich attack occurs when arbitrage bots trade against people whose transactions are in the mempool but have not yet been settled. Solana’s low commission made sandwiching too easy, and as a result, many users paid the price.

In a statement to CoinDesk, team representative Lucas Bruder said that Jito has been trying to minimize the negative impact of MEV for several months.

This included consulting with other protocols to detect trading bots and pricing mechanisms, but no suitable solution was found.

“Additionally, we attempted to engineer solutions to reject sandwich bundles, but our solutions became a cat-and-mouse game with MEV searchers,” the statement said. “Ultimately the Jito Labs team views negative MEV, including sandwich attacks, as a drag on the Solana ecosystem, and in the absence of an engineering solution we have made the difficult decision to suspend the mempool. We remain dedicated to providing an additional revenue stream for validators and stakers in addition to making Solana the best execution environment for all users.”

In the world of trading, a stable and reliable internet connection is of paramount importance. One crucial component that contributes to a seamless trading experience is a static IP address. This article explores the significance of having a static IP address for traders and discusses its benefits in terms of reliability, security, and accessibility. It highlights how a static IP address can enhance trading operations, improve system performance, and mitigate potential risks. Furthermore, the article provides practical insights and recommendations for traders seeking to optimize their trading activities by leveraging the advantages of a static IP address.

Introduction:

In the fast-paced and competitive realm of trading, every second counts. Whether it’s executing trades, accessing trading platforms, or receiving real-time market data, traders rely heavily on their internet connectivity. A crucial aspect that can greatly influence their trading experience is the type of IP address assigned to their devices. While dynamic IP addresses are commonly used, the significance of a static IP address cannot be overlooked. This article delves into the importance of having a static IP address for traders and elucidates its implications on trading operations.

Reliability:

A static IP address provides traders with a consistent and reliable connection to the trading ecosystem. Unlike dynamic IP addresses that frequently change, a static IP remains fixed, ensuring uninterrupted access to trading platforms and data feeds. This stability is particularly crucial for traders engaging in high-frequency trading or relying on algorithmic strategies, as any network disruptions or IP address changes can result in missed opportunities and financial losses.

Security:

Maintaining a secure trading environment is paramount for traders, given the sensitive nature of financial transactions. A static IP address offers an additional layer of security by enabling traders to implement stringent firewall rules and access controls. With a static IP, traders can whitelist specific IP addresses, restricting access to their trading accounts and minimizing the risk of unauthorized access or cyberattacks.

Accessibility:

Trading often requires remote access, allowing traders to monitor their positions and make informed decisions from anywhere in the world. A static IP address facilitates seamless remote access by ensuring that traders can reliably connect to their trading platforms, even when accessing them from different locations or using different devices. This accessibility empowers traders to stay connected and responsive to market dynamics, regardless of their physical location.

System Performance:

Trading platforms, especially those involving complex algorithms and real-time data processing, require optimal system performance. A static IP address can contribute to enhanced system performance by reducing latency and network congestion. Traders can prioritize network resources, optimize data transmission, and minimize packet loss, resulting in faster execution times and improved overall trading efficiency.