In a year of extreme volatility, Bitcoin’s price models have never had so much to prove
From lows of $3,600 to all-time highs just above $24,000, 2020 was the year Bitcoin (BTC) surprised analysts like never before.
Predicting the crypto asset’s next move is becoming increasingly difficult, while at the same time an accurate pricing model for Bitcoin Formula scam has never been more necessary.
Cointelegraph examines how the industry’s best have fared this year, and what’s worth following as 2021 approaches, possibly with $20,000 as a starting point.
From any perspective, 2020 was the year that Bitcoin’s Stock-to-Flow pricing model reached maturity.
Already one of the most well-known models in the industry, the various incarnations of the Stock-to-Flow followed BTC/USD as it collapsed to its dramatic annual lows and then rebounded strongly.
More importantly, Bitcoin’s entire behavior program fell within the terms of those models. Even today, the price is following the Stock-to-Flow to the letter (or rather, to the figure).
The Stock-to-Flow ratio is based on the amount of an asset that is already in existence (the „stock“) versus the amount that is regularly created and injected into the market (the „flow“). In the case of Bitcoin, this ratio is inherently tied to block reward halvings, which reduce the flow by 50% approximately every four years.
Therefore, after each halving Bitcoin’s Stock-to-Flow grows: there is currently nothing stopping it from reaching and maintaining the highest ratio of all known assets.
In terms of price, several variants of forecasts based on Stock-to-Flow have been pointed out by PlanB, the anonymous analyst now famous among Bitcoiners for coming up with such a model.
Each model predicts different price targets over the course of the current halving cycle ending in 2024. Of these, the most conservative sees the price at $100,000 by the end of 2021.
Despite this year’s criticism of Stock-to-Flow, PlanB has continued to defend that model: its faith was appropriately rewarded last week when Bitcoin aligned exactly with the price model.
Elliott’s Wave Theory
It’s been a rough year for another popular Bitcoin price prediction tool. Elliott’s Wave Theory, more of a price map than a precise set of targets, has had a complicated twelve months.
Elliott Waves, an indicator not exclusive to Bitcoin, provide a multi-phase market cycle that aims to track the highs and lows of an asset.
Due to its non-specific nature, however, these predictions are often huge. In the past, Bitcoin has achieved these goals due to its inherently volatile nature, especially in the early stages of its existence.
2020 also witnessed moments of clarity using Elliott Waves, but the prediction in April of a new correction to $3,000, corresponding to the collapse that occurred during the 2018 bear market, did not materialize.
The rainbow chart
Finally, the $23,000 level is particularly relevant to Bitcoin’s position beautiful so-called rainbow chart.
A colorful logarithmic chart of BTC/USD, the rainbow breaks down price levels into a series of buy and sell signals, roughly one for each color of the rainbow.
Sandwiched between red („maximum bubble territory“) and dark blue („practically a sell-off“), these colors reveal to investors and hodlers what to expect from Bitcoin based on its bullish or bearish direction.
Right now, despite being near all-time highs, the BTC/USD pair is in the light green range, described by the model as „still cheap.“
Bitcoin’s „rainbow“ chart
Like the Stock-to-Flow, the rainbow predicts more bullish potential for Bitcoin, with the $20,000 resistance now a mere thing of the past.