- Hoping that disasters will raise the price of crypto is creepy, says Buterin.
- Buterin and some analysts have judged the stock-to-flow model to be defective.
In contrast to popular opinions, Ethereum’s co-founder Vitalik Buterin believes that the movement of Bitcoin price cannot be determined by factors such as price models or the occurrence of certain events.
Recently, some articles inferred that the coronavirus was bullish for bitcoin, a conclusion that Vitalik disagrees with. The seasoned programmer took to Twitter to slam such reports, as well as PlanB’s stock-to-flow model.
Bitcoin Predictions Following Coronavirus Goes the Other Way
The price of Bitcoin, which rose above $10,500 just a few weeks ago, has dropped to $8,800. This price decline followed the spread of the yet to be contained coronavirus, which is massively ravaging countries across the globe.
A lot of articles surfaced with predictions that said the epidemic will help push the price of Bitcoin to new heights. Unfortunately, the happening on the ground is anything but a price surge. In light of recent events, Buterin has called such articles “post-hoc rationalized bullshit.”
He further stated that it is simply “creepy” to hope for an upturn in crypto prices because of the actions of disasters.
Stock-To-Flow Model Reeks Of Imperfection
One of the models used for the accurate prediction of Bitcoin prices is the stock-to-flow model. This model makes use of Bitcoin’s scarcity to work. In the past, Bitcoin’s price has been found to correlate with its stock-to-flow ratio.
Designed by PlanB, the price model has come to be accepted widely. According to the stock-to-flow model, Bitcoin’s price is expected to hit $100,000 before December 2021. The upcoming halving is predicted to activate a massive bull run that will see the price to the $100k mark.
However, Vitalik has some reservations about the model, saying that it lacks credibility. Vitalik is not the only person that is unexcited about the stock-to-flow model. Another notable individual, in the person of Charlie Morris, has also criticized it. Back in November 2019, Charlie Morris from Byte Tree analytics firm noted that the idea peddled by PlanB that Bitcoin will attain a trillion dollars market cap is dependent on two factors, its network activity, and mass adoption.
He further noted that while the idea behind the S2F model is brilliant, it focuses primarily on supply while the demand aspect suffers. This, according to Morris, makes the S2F model flawed en masse.
Your daily reminder that 95%+ of articles of the form "event X will make crypto go (up | down)" are post-hoc rationalized bullshit. pic.twitter.com/KBQps4MF5H
— vitalik.eth (@VitalikButerin) February 27, 2020
Another Analyst Slams the S2F Model
Analyst Alex Kruger has compared the S2F model to the Tether Manipulation paper. He said the former is to bulls what the latter is to bears. According to him, both of them are founded on highly decorated statistical models, especially the Tether Manipulation paper, and are flawed.
There is no conclusion yet as to who is right or wrong. The year 2021 will decide whether what is being said about the stock-to-flow model is correct or if it is indeed worth our time.