In his latest video, Dutch quantitative analyst PlanB delves deep into Bitcoin’s current market data. Following a November monthly close at $90,000—a 30% correction from its all-time high—uncertainty looms. The $100,000 support level failed to hold, but according to the creator of the Stock-to-Flow (S2F) model, there’s more to the story than just a price decline.
The market is currently sending mixed signals. While time cycles and certain indicators point towards a bear market, fundamental valuation models suggest a major bull market is still on the horizon, the analyst states in his video.
Three Scenarios for Bitcoin #
A crucial indicator that PlanB discusses is the Relative Strength Index (RSI), which currently stands at 55. According to the analyst, three scenarios are possible from this point:
- The doomsday scenario: Similar to 2014, 2018, and 2022, an RSI of 55 could signal the start of a prolonged bear market. This would mean the price could fall further, potentially towards $50,000.
- The ‘fake-out’: This is the 2019 scenario, where the market experienced a pre-bull market followed by a dip, after which the real bull run began.
- The ’new normal’: This is the scenario PlanB himself leans towards. Here, the RSI oscillates within a range between 55 and 75. No extreme peaks (red), but also no deep troughs (blue).
Institutional Investors Are Changing the Game #
Why does PlanB lean towards the third scenario? The reason lies in the entry of institutional investors. Unlike retail investors, who often try to buy low and sell high, institutions think in terms of exposure (e.g., 1% of their portfolio).
If the Bitcoin price rises sharply, their investment grows larger than that 1%, and they must sell to rebalance. If the price falls, they have to buy more. This mechanism dampens volatility and can cause Bitcoin to move in a tight band around the trendline, without the extreme outliers we’ve seen in the past.
Bottom Price and Stock-to-Flow Valuation #
Technically, the 200-week moving average and the realized price are both around $56,000. These lines have historically served as the ultimate bottom in a bear market. PlanB notes that in a real bull market, the price moves well above these lines (divergence), something we have not yet convincingly seen in this cycle. This suggests that the real mania has yet to begin.
Finally, PlanB stands by his Stock-to-Flow (S2F) model. Although critics are doubting the model due to the current dip, it still points to an average price of $500,000 for the 2024-2028 period.
The current price of $90,000 means, according to this model, that Bitcoin is heavily undervalued. PlanB states that the model does not predict tops or bottoms, but an average trend, and that the current price action may be frustrating but is not abnormal within the historical context.