Quantitative analyst PlanB is saying that Bitcoin will experience a severe bear market despite claims to the contrary by other experts.
In a new interview on business and investment YouTube channel FamilyOffice, PlanB highlights a few signals telling him that Bitcoin will eventually venture deep into bear territory.
“First of all, I’m one of the few that indeed thinks that there will be a next bear market, a crash like we’ve seen a couple of times before. A lot of people right now are saying that we’re done with the four-year cycle, and we will not have that kind of volatility and that kind of deep bear markets anymore.
I think we will have those bear markets. You can see it in the option prices. It’s priced in at 100% volatility. A couple of months ago when China abandoned [Bitcoin] mining, we went down 50% or more. So we almost had it. We had a crash of 50% right there. So that tells me that 80% [correction] when something really big happens is not out of the question yet.”
PlanB says that the next crash is likely to happen after Bitcoin reaches the price targets of his stock-to-flow (S2F) and stock-to-flow cross-asset (S2FX) models. The stock-to-flow model predicts an asset’s price by dividing the supply that already exists with the new supply entering the market annually.
Meanwhile, PlanB’s stock-to-flow cross-asset model (S2FX) looks at Bitcoin’s phase transitions from proof of concept to a financial asset in order to come up with a valuation for BTC.
“I think we will have to go up quite a bit, at least to make the stock-to-flow model values of $100,000 and $288,000. But after that, we’ll go down 80% again… I guess that’s part of the deal, and it’s also part of the greed and fear that’s in investors. People won’t change.
There will be FOMO [fear of missing out]. If we for example hit the $100,000 level a couple of months from now… people will FOMO in, and it will go up. Then after that, something horrible happens: another ban, another China ban or India ban or something. Everybody’s scared again and the fear sets in. So I guess that fear and greed is never going away in Bitcoin.”
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