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Home Cryptocurrency news Bitcoin

S2F Alternative Bitcoin Rainbow Chart Says BTC Is Currently on “Fire Sale”

Tony Spilotro by Tony Spilotro
12 months ago
in Bitcoin, Cryptocurrency news
Reading Time: 3min read
bitcoin btc rainbow chart reddit
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The highly cited stock-to-flow model, designed to assign a theoretical value to Bitcoin based on the asset’s hard-coded digital scarcity, may not be mathematically sound, according to the CIO of Arcane Assets, Eric Wall.

Wall not only claims the S2F model is flawed, but has offered up an alternative, dubbed the Reddit Rainbow chart, that could potentially provide a far better model for predicting Bitcoin’s price trajectory.

Arcane Assets CIO Claims Stock-to-Flow Model Is Flawed, Math Invalidated

With the Bitcoin halving less than one month away, hope that the event produces bullish results has almost entirely faded from the cryptocurrency market, due to the impact the coronavirus has had on the economy, the stock market, and nearly everything else it touches.

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As the pandemic outbreak spiraled out of control, it prompted a mass sell-off that caused a record-breaking drop in Bitcoin and other cryptocurrencies.

Related Reading | Bitcoin Shows Ideal Set Up For Epic Rally: Stock-to-Flow and Oversold RSI 

The collapse broke down a seven-year trend line, crushed the logarithmic growth curve, and smashed just about every valuation model imaginable. It also made the stock-to-flow model predicting a $55,000 Bitcoin in May 2020 – less than 30 days away – seem rather unrealistic.

The model’s creator, PlanB, based it on statistics from BTConometrics.com, however, the mathematics behind the stats have since been abandoned by the author and are considered invalid.

The author’s new price model puts Bitcoin somewhere near $30,000 in 2021, lowered from the initial $80,000 SF2 estimate.

The CIO of Arcane Assets, Eric Wall, also claims that the S2F values often fluctuate.

bitcoin reddit rainbow chart

Source: BlockchainCenter.net

Enter the Bitcoin Reddit Rainbow Chart, Following Price Action Since 2014

Instead, Wall offers up an alternative model to replace the S2F model so heavily cited across the crypto space. The replacement, in his opinion, should be the Bitcoin “Rainbow Chart” from Reddit.

The chart dates back to 2014, making the chart’s creator – Reddit users /u/azop –  a “real OG” in the Bitcoin community. azop had been posting the chart in the /r/BitcoinMarkets subreddit since then, updating the chart every so often simply to benefit the Bitcoin community, receiving no payment or incentive otherwise for keeping the chart active.

Related Reading | Crypto Market Cycle: Data Shows Bitcoin On Pace For Post-Halving Bull Run 

Wall says the Rainbow chart “just is,” and uses the “simplest approach” of seemingly following Bitcoin’s price trajectory over the course of its history.

Oftentimes, less is more, and the Reddit Rainbow chart thus far has held up to recent price action, and even was among the models and chart types that the latest collapse to below $4,000 fit within, without breaking it.

The next time you see the stock-to-flow model and wonder why Bitcoin price isn’t respecting its scarcity-based valuations, it might be time to start looking somewhere over the rainbow.

Featured image from Pixabay
Tags: bitcoinbtcusdcryptorainbow chartreddit
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Tony Spilotro

Tony Spilotro

I'm Tony Spilotro. Behind the pseudonym, I'm a global remote work leader with a decade of award-winning content experience and excellence. Here, I explore my newfound passions pertaining to privacy, finance, economics, politics, cryptography, property rights, and other libertarian-esque views. I am a Bitcoin evangelist, maximalist, and educator whenever I can be, helping to spread its message of freedom from government control, monetary policy mismanagement, and passing the buck - literally – to future generations. My journey from a curious retail crypto investor to a serious Bitcoin advocate, trader, and technical analyst is an unusual one, but life-changing nonetheless and has become less about money and more about a long-overdue revolution. While a firm believer in the laws governing math and science, I am profoundly fascinated by the impact of astrology and astronomy including moon and solar cycles and planetary alignment and their ability to influence and potentially predict markets. It hasn't yet clicked for me as to how to put anything to use, but I consider it my current rabbit hole I can't yet dig out of. My perspective of growing up alongside the internet, the dot com era, the Great Recession, and roots in video games collecting coins and rare items caused Bitcoin to immediately make sense to me. Through all of these lenses, I seek to produce content that is educational and entertaining, and I thank you sincerely for taking the time to read what I have to say. Please follow me on Twitter and feel free to drop me a line if you would like to work together.

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