From lowest $ 3,600 to all-time highs of just over $ 24,000, 2020 was the year that Bitcoin (BTC) surprised analysts like never before.
With anticipation of its next move becoming increasingly difficult, likewise there has never been a greater demand for an accurate Bitcoin pricing model.
Cointelegraph looks at how the business got the best out of this year, and what is worth pursuing as 2021 begins – possibly with $ 20,000 as a starting point.
No matter which way you look at it, 2020 was the year that the stock-to-flow Bitcoin price model came of age.
Already one of the best known in the industry, various stock-to-flow incarnations tracked BTC / USD as it diversified to its dramatic annual lows and shot back up again.
Above all, Bitcoin’s entire behavior program still fell within the models’ requirements – on December 19, it follows a stock-to-flow to the letter (or digit).
The stock-to-flow ratio is based on the amount of an existing asset (the stock) versus the amount added through the creation (the flow). In the case of Bitcoin, this ratio is inherently tied to block subsidies – these reduce the flow roughly 50% every four years.
As such, with each halving, Bitcoin’s ratio becomes higher, and there is currently nothing in the way it arrives and retains the highest ratio of any known asset.
In terms of price, several variations of stock-to-flow prediction have been created by PlanB, the anonymous analyst who has become a household name among Bitcoiners.
Each model calls for different price targets to be met during the current halving cycle through 2024. The most conservative is $ 100,000 by the end of 2021.
Despite major criticism of this year’s stock-to-flow, PlanB has defended its model, and its faith was rightly rewarded when Bitcoin rose to hit the model’s price just last week.
The Elliott Wave Theory
It’s been a testing year for another popular Bitcoin price prediction tool. The Elliott Wave Theory – more of a price map than a strict set of targets – has had a tough twelve months.
Not Bitcoin-specific, Elliott Wave provides a multi-stage market cycle that seeks to track the highs and lows of an asset.
Due to its anonymity, however, those predictions are often huge, but Bitcoin has achieved before because of its essentially volatile nature early in its existence.
2020 similarly produced moments of clarity using Elliott Wave, but April’s prediction of a new $ 3,000 price – equivalent to the 2018 bear market pool – failed to materialize.
Finally, a spot on $ 23,000 is Bitcoin’s ranking on the so-called Rainbow Chart.
A lightweight BTC / USD log chart, Rainbow divides price levels into a series of buying and selling tips – roughly one for each color of the rainbow.
Ranging from red (“the upper bubble territory”) to dark blue (“basically fire sales”), these tell investors and hodlers what to expect next from Bitcoin based on its upward direction or down.
At present, even at almost all-time highs, BTC / USD is still going up and the model only describes it as “still cheap.”
As with stock-to-flow, Rainbow thus foresees more upside potential for Bitcoin, now that $ 20,000 resistance seems solid in the past.