This post will revisit my halvening post of July 2016 and will begin with a brief overview of what I wrote and predicted four years ago and will compare with today’s 2020 hindsight, before using what we can glean from the last four years in trying to predict the future and the next four years and Halving 2024… I will then be discussing at length Stock 2 Flow modelling and focusing in particular on the Bitcoin USD Stock 2 Flow model and what it can reveal, and to illustrate this I will be presenting Plan B’s pioneering work in this area, as Bitcoin’s monetary policy will become more and more relevant to the investing public in the months and years ahead…

The Bitcoin Halvening (of 2016): Quantitative Tightening And Paving The Road To Mass Adoption

I can scarcely believe it has been nearly four years since I published my original post, it only feels like yesterday but when you look back at the last four of progress on many other levels it feels like a different and far more primitive age…

I began with discussing the Bitcoin basics, that of an electronic distributed ledger that is native to the internet, which is open source and can be accessed by anyone… This ledger exists in the form of blocks which contain a number of transactions, and these transactions and blocks are updated every ten minutes, to form a chain of blocks, hence blockchain…

The fuel that powers the maintenance and perpetual updating and upgrading of this electronic distributed ledger is of course electricity, which is directed through specialized hardware which is also called Bitcoin mining, as Bitcoin is based upon a Proof of Work consensus mechanism… The Quid Pro Quo these miners receive in exchange for the expensive mining infrastructure and colossal amount of electricity that have contributed to the continuing rise of Bitcoin in the last ten years, is getting paid in bitcoins either through the Block Subsidy (issued every 10 minutes) or through network transaction fees (block subsidy + transaction fees = Block Reward)…

In essence, the maintenance and updating of the ledger and the emission of credit are both powered by a decentralized pool of mining power (although concentrated in low cost electricity producing geopolitical areas), which means that there is no single issuer of bitcoin or a single counter-party that controls the Bitcoin network, which makes it practically unique in human history… This network can and will replace the historic centralized credit systems which we know today as banking and central banking, and Distributed Ledger Technology as I have discussed in all my posts is a major step forward for Humanity, which even ten years later has still barely started to grasp all of this…

Bitcoin’s Credit Issuance – The Killer App

The most important thing about the Bitcoin protocol in my opinion is its credit emission which as I said earlier is to miners solely, who can then sell and distribute through exchanges into the open global market… And this credit issuance is governed by a pre-determined and predictable currency emission schedule, with a maximum cap of 21,000,000, and which I’ll express mathematically as follows:

Bitcoin Rate Of Issue (Block Subsidy) Made Easy

Bitcoin mines approximately one block every ten minutes = 6 blocks per hour = 144 blocks per day = 52,704 blocks per year ~= 210,000 blocks every four years

Bitcoin launches on January 3rd 2009 with a block subsidy of 50 bitcoins every 10 minutes (300 bitcoins per hour, 7,200 per day) = 210,000 x 50 = 10,500,000 btc (half the maximum cap)

50% of the bitcoin in existence has been issued by 28th November 2012…

Bitcoin subsidy halving in 2012 with a block subsidy of 25 bitcoins every 10 minutes (150 bitcoins per hour, 3600 per day) = 210,000 x 25 = 5,250,000 btc (a quarter of the maximum cap)

75% of the bitcoin in existence has been issued by 10th July 2016…

Bitcoin subsidy halvening in 2016 with a block subsidy of 12.5 bitcoin every 10 minutes (75 bitcoins per hour, 1800 per day) = 210,000 x 12.5 = 2,625,000 btc (an eighth of the maximum cap)

87.5% of the bitcoin in existence has been issued by the third halvening (11th May 2020)…

Bitcoin subsidy halvening in 2020 with a block subsidy of 6.25 bitcoin every 10 minutes (37.5 bitcoins per hour, 900 per day) = 210,000 x 6.25 = 1,312,500 btc

93.75% of the bitcoin in existence will have been issued by the fourth halvening ( Early 2024)…

Bitcoin subsidy halvening in 2024 with a block subsidy of 3.125 bitcoin every 10 minutes (18.75 bitcoins per hour, 450 per day) = 210,000 x 3.125 = 656,250 btc

Bitcoin subsidy halvening in 2028 with a block subsidy of 1.5625 bitcoin every 10 minutes (9.375 bitcoins per hour, 225 per day) = 210,000 x 1.5625 = 328,125 btc

Bitcoin subsidy halvening in 2032 with a block subsidy of 0.78125 bitcoin every 10 minutes (4.6875 bitcoins per hour, 112.5 per day) = 210,000 x 0.78125 = 164,062.5 btc

Bitcoin subsidy halvening in 2036 with a block subsidy of 0.390625 bitcoin every 10 minutes (2.3475 bitcoins per hour) = 210,000 x 0.390625 = 82,031.25 btc

Bitcoin subsidy halvening in 2040 with a block subsidy of 0.1953125 bitcoin every 10 minutes (1.171875 bitcoins per hour) = 210,000 x 0.1953125 = 41,015.625 btc

Bitcoin subsidy halvening in 2044 with a block subsidy of 0.09765625 bitcoin every 10 minutes (0.5859375 bitcoins per hour) = 210,000 x 0.09765625 = 20,507.8125 btc

Bitcoin Total Blocks = 210,000 blocks x 10 ~= 2,100,000 blocks (forty years) until end of currency supply

Bitcoin Total Subsidy = 50 + 25 + 12.5 + 6.25 + 3.125 + 1.5625 + 0.78125 + 0.390625 + 0.1953125 + 0.09765625 ~= 100 bitcoins

Total Bitcoins = 210,000 x 100 = 21,000,000 bitcoin units

I would advise the reader to thoroughly familiarize themselves with the Bitcoin inflation chart above and as I’ve written down in numbers as this is the key to understanding the halvening, to understanding stock and flow modelling, from whence I will be deriving my price and value predictions for Bitcoin later in this post, indeed this currency issue schedule should form the basis of any investing proposition when searching in what makes Bitcoin valuable…

Bitcoin Currency Halvenings – Inflation halving

The above should make also make it crystal clear that as part of Bitcoin’s pre-determined emission schedule, every 210,000 blocks or approximately every four years the supply of newly minted bitcoins halves, another way of stating this is that Bitcoin’s inflation (flow) rate halves every four years… Bitcoin’s first halving occurred in November 2012, just over a month before its fourth birthday, the second halving occurred in July 2016, five months before its eighth birthday, and is scheduled to halve again on 11th May this year, seven months before its twelfth birthday…

Bitcoin And Fiat Currencies – An Evolutionary Symbiosis

Bitcoin is a haven and a mathematical schedule of predictable stability, but alas currently only for the few, in a world where the many are still trapped in a prison of debasing and inflationary legacy fiat currencies, and therefore Bitcoin as an upstart has been pitted against the established incumbent, which has meant that until Bitcoin is ready to steal the crown of fiat currencies it is subject to all the uncertainty, volatility and instability of the bankrupt and dying financial systems of the world… Indeed, the only way Bitcoin can supersede fiat currencies in the long run is by being connected to fiat currencies via exchanges and receiving fresh infusions of value from those escaping the currency prison, which presents us with a double edged sword…

Now in theory and according to utopian ideals, Bitcoin can be earned and consumed without any need for the use of fiat currencies which is fundamentally true, however in practice Bitcoin has grown to its current size and value nearly exclusively through the proliferation of fiat currency exchanges, which has propelled Bitcoin more as a store of value and inflationary hedge rather than as peer to peer currency and a medium of exchange, and this dichotomy has existed since the early days and has underlined some of the major Scaling Debates of the last few years…

So while the utopians gave up on Bitcoin as a store of value and forked off Bitcoin Cash and BSV in search for the cheap and instantaneous medium of exchange and payment system utilities, the pragmatists have understood that the construction of fiat to Bitcoin exchanges is a necessary first step on the road to reserve currency status, for many reasons which I’ll discuss later…

Bitcoin and Deflation – Measuring in Fiat Currencies

With that said, to demonstrate the deflationary properties of Bitcoin in fiat currencies I am inserting a table below of Bitcoin’s price on this day (which I’ve chosen as 15th March) in US Dollars, every year since 2009, and which I’ve taken from this chart…

Bitcoin on 15th March 2009 – $ 0.00

Bitcoin on 15th March 2010 – $ 0.00

Bitcoin on 15th March 2011 – $ 0.90

Bitcoin on 15th March 2012 – $ 5.45

Bitcoin on 15th March 2013 – $ 47.00

Bitcoin on 15th March 2014 – $ 641.00

Bitcoin on 15th March 2015 – $ 282.00

Bitcoin on 15th March 2016 – $ 415.00

Bitcoin on 15th March 2017 – $ 1,228.00

Bitcoin on 15th March 2018 – $ 9,154.00

Bitcoin on 15th March 2019 – $ 3,881.00

Bitcoin on 15th March 2020 – $ 5,166.00

This gives you a brief snapshot to Bitcoin’s value on one particular day in every year since inception to demonstrate its deflationary and currency appreciating powers over the last decade, however does not tell us much on how the halvening effects upon what I would call the Bitcoin boom and bust cycle…

Bitcoin Intra-Cycle Volatility – Boom and Bust Cycles

As I have already described Bitcoin does not exist in some vacuum devoid of external factors and influences, it was born in the middle of a financial crisis and was born of a financial crisis, and it has spent the last eleven years building its network from the ground up, from underlying blockchain improvements to streamline code and increase capacity and efficiency, to increasing utility and building second layer capabilities to scale medium of exchange and payment layers, and especially in building fiat currency exchanges that have allowed investors to be able to buy bitcoin with fiat currencies… Indeed the value of the Bitcoin ecosystem has largely been blown up over the years by infusions in fiat currency that has somewhat mirrored the rumblings in the fiat financial system post crisis, for example Bitcoin shot up in early 2013 after the bank bailins in Cyprus, and when the attractiveness of a sovereign censorship resistant non fiat currency had a test case for the savings trapped in the crumbling European banking system…

So Bitcoin is for now heavily connected to and dependent upon the connections to the fiat banking system which is really a topic and subject in itself, for further discussion see my Bitcoin Kills Banking post of 2015, Bitcoin Kills Banking Revisited post in 2017, and my Bitcoin Kills Banking Redux: Exchanging And Exchanges (DEX, Cash Apps, Centralized Exchanges, Fiat Derivatives, Banking Protocols and Stablecoins) I published in 2019…

So here I will try and relate Bitcoin’s volatility in fiat currencies (the US Dollar being the most popular proxy and world reserve currency) and link it to Bitcoin’s currency halving cycles, which will also be discussed in more detail later during the Stock and Flow discussion… Taken from this chart…

On November 28th 2012 when Bitcoin underwent its first currency halvening, was $13 before soaring to $142 by 6th April 2013, for a 1000% or 10 x increase in less than 6 months, and stabilized around the $100 mark for the next 6 months… The next leg up came from September to December 2013 when Bitcoin hit its cycle high of $1137 on 5th December 2013 for a 10000% or 100 x gain since the halvening a year earlier…

With the demise of Mount Gox in February 2014 and the main price setting exchange at that early point in Bitcoin’s existence, the price suffered an 80%+ epic collapse and currency bear market throughout the rest of 2014 and 2015 with a rough price of $250 in those lean and barren years, and with a cycle low of $208 on 17 January 2015…

On 10th July 2016 when Bitcoin underwent its second currency halvening was $647 (please note a 50 x gain between first and second halving), before heading on a torrid rally for the next 17 months that culminated with the blow off top and cycle high of $19,280 on the 17th December 2017, for a 30 x gain since the second halving…

Please note also that the cycle highs for Halvening Cycle No 2 (2012-2016) and Halving Cycle No 3 (2016-2020) occurred in December 2013 and 2017 respectively, which may give you some historic insight or foresight in predicting the next cycle HIGH (hint: December 2021?)…

From the $20,000 euphoric highs of December 2017, Bitcoin then spent all of 2018 hemorrhaging value down to a cycle low of $3,242 on 15th December 2018, please also note that the cycle lows for Halvening Cycle No 2 (2012-2016) and No 3 (2016-2020) happened within a month of each in other in (January) 2015 and (December) 2018 respectively, near enough four years apart, which may give you some historic insight or foresight in predicting the next cycle LOW (hint: December 2022 into early 2023?)…

2019 was the year of rebuilding for the Bitcoin price as it recovered from the $3,000 handle to soar back to $12,587 by July 2019 before bouncing down and finishing 2019 at around $7,000… It shot up to $10,000 earlier this year, but in the last few weeks as the next great financial crisis has seemingly started, Bitcoin has suffered another waterfall cascade down to $5,000, and has stabilized around $7,000 for now, one month from its Halvening Cycle No 4 (2020-2024)… Please note here that Bitcoin’s price was $650 prior to the 2016 Halvening, while it is $7,000 today for a rough 10 x gain in the last four years…

Bitcoin Price Predictions – My Back Of Fag Packet Calcs

So what can we glean about Bitcoin’s boom and bust cycles from the above? Bitcoin’s all time cycle highs in Halvening Cycles No 2 and No 3 both happened in December (of 2013 and 2017) and over a year following each halvening (December 2013 high was one year from November 2012 Halving, and December 2017 high was 17 months after July 2016 halving)… Bitcoin’s all time cycle lows in Halvening Cycles No 2 and No 3 happened in January 2015 and December 2018, both roughly 18 months or a year and a half before the next halving… HIGHS AND LOWS OF LAST 2NR 4 YEAR CYCLES (8 YEARS) HAVE HAPPENED AROUND DECEMBER!!!

In USD nominal terms, from the cycle high following the first halvening ($1100) to the cycle high following the second halvening ($20,000) was roughly 20 x, which gives us the possible insight that Bitcoins next cycle high (extrapolated from the above around December 2021) at another 20 x, would be a $400,000 cycle high! Even more instructive might be the price of Bitcoin at Halving No 1 ($13), to the price of Bitcoin at halving No 2 ($650), to the likely price of Bitcoin at Halving No 3 (based on today’s price 30 days out from halving of $6,500); taking into account the infancy and volatility of the first halvening cycle when Bitcoin shot up to $100 soon after, if we take the currency gain from Halving No 1 to No 2 at 10 x (or $65 to $650), and currency gain from Halving No 2 to No 3 at 10 x (or $650 to $6,500), the currency gain at Halving No 4 could well be 10 x higher, $65,000 in early 2024…

With regard to cycle lows, the cycle low of Halvening Cycle No 2 (January 2015) was $200 and the cycle low of Halvening Cycle No 3 (December 2018) was around $3250 for a roughly 15 x gain, and so it can be extrapolated the next cycle low around December 2022 with a 15 x gain would be $50,000…

Quick Recap extrapolating prologue from past for Halvening Cycle No 4 (2020-2024):

Price at 2020 Halving (May 2020) : $6,500

Cycle High Price (December 2021) : $400,000

Cycle Low Price (December 2022) : $50,000

Price at 2024 Halving : $65,000

So these are my preliminary and very approximate price points for Halvening Cycle No 4, and we will see how well they stack up against Plan B’s Stock to Flow Modelling, when I get around to discussing it in detail later…

Deflation And The Bitcoin Economy

A should be evident by now, Bitcoin has continuously grown and evolved over the last eleven years despite the chronic volatility and price fluctuations described above, which have big effects on its network, community and economy, so I need to discuss here as I did in my original halving post, on the elements that make up Bitcoin, which I’ll bullet point below:

Bitcoin Miners

Holders (Retail)

Speculators (Institutional)

Companies (Bitcoin businesses)

Bitcoin Developers

As the miners provide the electrical power (largely generated and paid in fiat currencies) that both secures the network and emits the currency they are a critical component, and as no single miner can mine Bitcoin at zero cost (in hardware and energy), to remain functioning and flourishing in the longer term they have to sell their bitcoins into the open market, and into exchanges… Exchanges therefore connect miners looking to sell bitcoins for fiat, with hodlers (retail investors) looking to buy bitcoins with fiat currencies, and also aid in institutional investing (but under different regulations and far less developed) and the derivatives complex that is growing by the day… Bitcoin companies (many of them exchanges) profit from the ecosystem and contribute resources either into the connections between Bitcoin and the fiat currency system, or dedicated to Bitcoin only services, and of which there are countless businesses in Bitcoin… The developers are the maintainers of Bitcoin’s network, they are creators of improvements and efficiencies, and they are also the pioneers in building the infrastructure and gateways on top of bitcoin that will serve for the many future test cases in this digital and distributed global accounting ledger and network…

Please note that all the individual factions or elements above do not exist in a vacuum, the miners are dependent on exchanges and hodlers, the hodlers are dependent on miners and developers, the developers are dependent on miners and hodlers, etc, etc… As Bitcoin’s governance is distributed between these divisions, while there has been historic and ongoing tensions between miners, businesses, hodlers and developers (see my Scaling Debate and SegWit Activation posts of 2017), there also exists a symbiosis (call it ultimate consensus) between all factions or divisions in the future success of Bitcoin, as it includes many or all of their hopes and dreams of success in the future… In that way, Bitcoin’s governance structure can be likened to a Mexican Standoff, where adversaries constantly wave dicks and point guns at each other, while never pulling the trigger that would threaten the extinguishing of the whole project and ecosystem…

The most successful distributed consensus network we have ever seen, work like this!

Deflation and the increasing value of Bitcoin over the last eleven years has enriched the whole Bitcoin ecosystem, it has created Billions in revenues for mining companies and their supply chains, Billions in revenues for exchanges, it has made numerous hodlers (especially the early ones) very wealthy, as it has for developers who also invested or are getting paid in bitcoins, it is only this chronic deflation and increase that makes Bitcoin a continuing success, in rewarding the ecosystem with the gains that makes them able to cope with the mind bending volatility and cycle highs and lows that are an inevitable part of Bitcoin at this early stage in its existence… What keeps all these players in the game during bull markets and bear markets, is this expectation that the predictable scarcity of Bitcoin’s issue schedule and the continuing improvements in its functioning…

The Bitcoin Halving Revisited: 2020, Stock And Flow Models, And Price Predictions

Having laid the rough foundations for stock and flow models, now I can discuss in more detail the man who has done more than any other to explain this concept for Bitcoin, and that is Twitter User Plan B with the handle @100trillionUSD…

For further background into the evolution and science of Bitcoin’s stock to flow modelling, I list the following:

Modelling Bitcoin’s Value With Scarcity – Plan B’s first post on Medium (22nd March 2019)

Plan B interview with Stefan Livera (15th April 2019)

Efficient Market Hypothesis and Bitcoin Stock To Flow Model – Plan B Medium Post (17th January 2020)

Plan B interview (Responses to the S2F Model) with Stefan Livera (5th November 2019)

While the rest of this post will discuss Stock 2 Flow modelling as laid out by Plan B, for the roughly two and a half hours of research links I’ve listed above, they are well worth the time to research from the horse’s mouth so to speak…

Plan B (100 Trillion USD) – Meaning

Plan B intimates a different plan from the main plan (in mainstream investing), and $100 Trillion is both a reference to the $100 Trillion Notes that came out of Mugabe’s Zimbabwe in the hyperinflation of 2009, and also refers to Plan B’s Stock 2 Flow Model target of $100 Trillion USD in value for Bitcoin, as I’ve included below…

The gold market currently has around $8.5 Trillion in market cap, Silver has $308 Billion in market cap, Bitcoin’s market cap was at $70 Billion (this chart is from March 2019, and the first iteration of stock 2 flow model)… The goal is $100 Trillion…

Stock To Flow

The idea of Bitcoin is scarcity as I described earlier, and it is a historical quirk of money or currency as a store of value asset that it is both costly to produce (see Nick Szabo’s Unforgeable Costliness) and that it is never really consumed, so that the stock accumulates while the flows remains scarce… To take a simple example, the reason eggs do not act as a long term monetary asset or store of value is that they are fragile and have a shelf life of a few weeks or months and therefore the stock of existing eggs along with the flow is continually being consumed or destroyed in order to realize the value of eggs; as money is a commodity that is desired against all other goods and services (and inferior stores of value, e.g. eggs) then it is never really consumed or destroyed, but rather stockpiles in the economy… Historically the Origin of Money and the best and longest lasting monies have been gold and silver, and thus the stockpiles of gold and silver coins and bars and weights were constantly increasing against a scarce flow of newly mined and minted gold and silver supplies, which gives monetary media (gold and silver) HIGH stock to flow ratios, and therefore predictable and stable prices and future cost discounting…

Copied from Plan B’s March 2019 post showing stock 2 flow properties of Gold, Silver, Platinum and Palladium, and explaining why Gold and Silver are monetary goods, and why Platinum and Palladium are not… In short the best monetary or media of exchange have a low flow to stock, or a high stock to flow…

Bitcoin’s Stock To Flow

I have already explained at length Bitcoin’s stock to flow metrics earlier however to save the reader from having to scroll back I insert the chart again below:

View at Medium.com

As destroying Bitcoin is far more costly than hoarding it, Bitcoin is a digital good and currency that is stockpiled (HODLing) out of circulation, while the flows are stable and scarce and with a flow halving schedule every 210,000 blocks (four years)… In essence, Bitcoin’s Stock 2 Flow doubles every 4 years!

Bitcoin’s Stock To Flow Model in Fiat Currency (BTC/USD)

Plan B’s original BTC/USD Stock 2 Flow Chart of March 2019; the horizontal axis in years, vertical axis in US $, the black line showing the stock 2 flow model, and the coloured dots the historic price of bitcoin in $… I won’t comment on the number of blocks per month component because I don’t really consider it relevant to the discussion, Plan B has further refined this chart since the original post, which I’ll get to later…

Efficient Market Hypothesis and Bitcoin Stock To Flow Model

Plan B’s second Medium post was published on January 17th of this year with some updates and comments on validation and critiques of his original post and S2F model… I won’t bother discussing Efficient Market Hypothesis, but I will post this updated S2F chart plotting a longer term Bitcoin to USD value…

Longer term S2F model chart predicting a range band of $100,000 in Halvening Cycle No 4 (2020-2024), $1,000,000 in Halvening Cycle No 5 (2024-2028), and $10,000,000 in Halvening Cycle No 6 (2028-2032)…

The Risk & Return Model is also interesting and worth further digesting if you are an investor or thinking about investing in Bitcoin, and is even more relevant to institutional investors who may only hodl Bitcoin as a fractional hedge in a portfolio of fiat currency derivatives… To save regurgitating in my words, I simply include the excerpt below (EMH is Emerging Market Hypothesis):

The No Brainer case for a Bitcoin allocation of 1% in any investment portfolio: high returns for low risk is gold dust in a world of zero and negative yielding debt…

Plan B’s Twitter Account – Further Refining of Stock 2 Flow Modelling

Plan B has only released two articles on Medium, but has complemented this with a Social Media presence, on Twitter with the handle @100trillionUSD, and where he has further refined and detailed the stock 2 flow model, especially with respect to Bitcoin’s Halvening Cycle… The USD price of Bitcoin has been historically modelled against currency halvings, which gives you a far more vivid and visual representation that the mathematical version which I presented earlier in the post…

The latest halvening update Tweet, and the chart I post separately so we can discuss it some more…

What it took me ten paragraphs and a cloud of mathematics to explain earlier, this does in one chart… Note the colour code across the horizontal axis with months to next halving, red indicating a new four year cycle from the halving date, working through orange, yellow, green and toward blue which represents the end of a four year cycle, before turning red again… Now you can visualize the boom and bust cycle of BTC/USD’s halving cycles, and you will notice that in halving cycles the huge gains in price in Halving Cycle No 2 and No 3 is during the red and orange periods, the major falls in price is during the yellow and green periods, and that the periods in blue tend to be stable in price… While last month’s price crash wiped half of Bitcoin’s value overnight and there may be further weakness in the coming weeks and months as the “miner death spiral” hysteria and the continuing tremors rumble in the bowels of the fiat currency system, we are in the blue section which historically has NOT been that bullish for the price… Indeed the Halving event itself and the flow of currency being chopped in half overnight historically has not been that bullish for the price, it is only in the eighteenth months AFTER the halvening that Bitcoin’s price spikes, in the following twelve months collapses, and it is in the eighteen months BEFORE the halvening that Bitcoin’s price stabilizes on a higher plain… This chart really should be required studying for investors or speculators trying to time their entry and/or exit from the BTCUSD price cycle…

There are a few more tweets from Plan B lately modelling and visualizing different aspect of the Bitcoin ecosystem which I wanted to highlight, which I’ll add underneath…

Updated Stock 2 Flow Modelling Comparison

Following the publishing of the original Medium post, Plan B had some further feedback on the stock and flows of the monetary metals and other historic store of value assets and commodities, which allowed him to refine his earliest chart on stock 2 flow comparisons… Bitcoin’s stock 2 flow number will double from 27 years to 54 years following the 2020 halving, and will overtake Silver’s 33 year S2F ratio, and will overtake Gold’s 58 year S2F ratio in early 2024…

Another fascinating visualization of Bitcoin’s S2F compared to other assets, and including the halving colouring schedule…

Miner Visualization Charts

A couple of good charts for visualizing the halving cycle on the Bitcoin mining ecosystem…

The reckoning for many miners post halvening: with the Bitcoin supply halved, their production costs will double, which will send the most inefficient offline, and which may lead to big adjustments in Bitcoin’s difficulty adjustment algorithm downwards and hence making it more profitable to mine, but with a halving of the flow rate possibly taking a few months to work its way through Bitcoin mining’s supply chain and then through exchanges into the open market, an increasing shortage of bitcoins will have to be met with higher prices paid in fiat currencies, which will further increase miner profitability and which will drive Bitcoin’s difficulty adjustment algorithm higher…

Whether you believe that hashpower follows price or that price follows hashpower, they are no doubt correlated: the price gains in Bitcoins make mining more profitable and desirable, while price losses make mining less profitable and desirable, at least in theory… That the miners have the foresight to invest many months or years in the future for Bitcoin while also having to deal with the batshit crazy short term price volatility of the very commodity they are mining, is a testament to the risk the miners take compared to average investor, but the rewards are also greater for those who can mine for the lowest costs of production… The development of futures and cash settled derivatives have also allowed miners to hedge short term volatility with long term revenues, as they are somewhat of a hybrid, working to produce Bitcoin but with costs still largely in fiat currencies…

Sharpe Ratio – Risk To Return Ratio

Bitcoin’s RSI (Relative Strength Index)

Bitcoin’s relative strength measured against time, and includes for the halvening cycle… Another insightful chart into periods of strength and weakness…

Stock 2 Flow Modelling – Long Term Moving Averages

Current price divided by 6 month with the average price being 1 (One), measures under 1 are an indication of short term oversold conditions compared to longer term average, while measures over 1 indicate short term overbought conditions to longer term average… As of April 02, 2020, the Mayer Multiple is 0.81 compared to the historical average of 1.45, which implies Bitcoin is currently extremely oversold (at 81%, it has only been more oversold for 19% of its history)…

One of earliest manifestations of stock 2 flow modelling was the Mayer Multiple, a very simple metric developed by Trace Mayer with the ratio comprising Bitcoin’s USD price against the 200 Day Moving Average, giving Bitcoin a quick comparison of the live price against the average price over the last six months, which to be clear is to identify some signal and a more stable long term measure, over volatile unstable and short term measures…

Moving Averages therefore play an anchoring role for future expectations, and have been part of the fiat currency financial system for decades, as reliable measures for traders and investors as they tried to find signal among the noise… The 50 Day Moving Average, the 100 Day Moving Average and the 200 Day Moving Average are all popular longer term measurement gauges, at roughly 6 weeks (50 days), 3 month (100 days) and 6 month (200 days) averages, and as should be evident the longer the time duration of the moving average, the stronger the signal… With that said, one of Plan B’s recent charts mapped out the Bitcoin price, versus the 200 WEEK Moving Average, otherwise stated the 4 year moving average…

While Bitcoin’s 50, 100 and 200 Day Moving Averages cross to the underside (Death Cross) and upside (Golden Cross) relatively often, when modelled against the 200 Week (4 year) Moving Average, Bitcoin’s longer term value has never gone down and is accumulating at 4% a month… This is another compelling visualization of Bitcoin’s longer term metrics…

Stock 2 Flow Modelling – Signal Over Noise

And finally, a meme that I think encapsulates the utility and usefulness of Stock 2 Flow modelling: it gives HODLers and investors some measure of predictability, and of a long term signal in the short term volatility and noise of Bitcoin’s price swings and day to day trading… By extrapolating past performance and capturing repeating patterns that are produced by Bitcoin’s particular network set up, I believe it gives investors and speculators a far better than chance predictive tool in potential entry and exit points…

Signal > Noise

Stock 2 Flow Modelling and Price Predictions

The Stock 2 Flow Model updated for Bitcoin’s March meltdown…

Bitcoin’s latest crash has not invalidated Plan B’s Stock to Flow model yet, and is unlikely to in any case as he’s made abundantly clear, the predicted path of Bitcoin’s value although a line, has wide range bands to account for the volatility and the epic overshooting and undershooting to the mean that Bitcoin goes through during its four yearly cycle… It is impossible to give any definitive price predictions other than to estimate or guesstimate ranges of values, and to constantly maintain and empirically verify if model and reality remain correlated…

Plan B’s S2F Model I interpret as follows:

The Bitcoin price in USD increases by a factor of 10 X every 4 years, and here I have taken some liberties with Bitcoin’s first cycle, going from 0 to $100 is a factor of 100 X in the first four years, however Bitcoin’s first cycle was unique as it was starting from scratch, so roughly in the First Halving Cycle (2009-2012) we went from $10 to $100, the Second Halving Cycle (2012-2016) took us from $100 to $1000, the Third Halving Cycle (2016-2020) took us from $1,000 to $10,000, The Fourth Halving Cycle (2020-2024) will take us from $10,000 to $100,000, and the Fifth Halving Cycle (2024-2028) will take us from $100,000 to £1,000,000… As stated above by Plan B, this should be interpreted as the average price of any given cycle, and cannot factor in short term noise and the wild peaks and troughs of raging bull and bear markets…

Against the above I will restate my price predictions, as I derived earlier:

Extrapolating prologue from past for Halvening Cycle No 4:

Price at 2020 Halving (May 2020) : $6,500

Cycle High Price (December 2021) : $400,000

Cycle Low Price (December 2022) : $50,000

Price at 2024 Halving (March to June) : $65,000

I could go further and try and predict the values for Halvening Cycle No 5 (2024-2028), but I think predicting the next four years is plenty enough for now, as I wrote my original post for the 2016 Halving, I am writing this post just before the 2020 Halving with the predictions for the 2020-2024 cycle, and I expect I will revisit this post in 2024, with 20/20 hindsight, and it is only then will we know for sure how accurate both Plan B’s Stock 2 Flow Models and my price and time predictions, will be…

Which brings us to my last section, before the conclusion…

Falsifying The Bitcoin Stock 2 Flow Model – Financial Crisis And Fiat Instability

Plan B has received some critiques and has welcomed anybody to attempt to falsify his Stock 2 Flow Models and as far as I know has yet to receive any compelling or verifiable falsification, so I will attempt it here but making sure I define under which conditions I believe the model is falsifiable…

Plan B’s original charts, the stock 2 flow comparison with gold and silver as monetary goods and other commodities as utility goods, I cannot falsify as stock 2 flow dynamics are historical and apply to all assets, and they are long established in Bitcoin, from Saifdean Ammous to Trace Mayer to the detailed work of Plan B and probably many more Quantitative Analysts in the future… I also cannot falsify the BTC/USD stock to flow model up until now because this is also self evidently true, and the price has never meaningly deviated and broken or obsoleted the model…

Where I believe the model is falsifiable is not on the Bitcoin side, which as I’ve extensively described is as stable and pre-determined and predictable as can be both now and in the future, the instability or the unknown for the BTC/USD Stock 2 Flow Model is fiat currencies and the Eurodollar underpinned global financial house of cards… Bitcoin may only exist because of the world financial system and its spectacular meltdown in late 2008 and born into the carnage of January 2009, but by the time had acquired any kind of financial value and market outside of Satoshi’s Vision, the crisis had abated, the recession ended, interest rates cut to zero and QE1 had been unleashed… Despite the Eurozone Crisis of 2011 and Mario Draghi’s Whatever It Takes Speech, further iterations of QE2 and QE3 by the Federal Reserve, and ridonculous money priting out of China and Japan papered all over the apparent cracks in the post 2008 facade, and increased credit creation has fuelled the this current TEN year long easing cycle that ground interest rates lower and asset prices higher, this is the low volatility melt up that Bitcoin has spent its ENTIRE life evolving within…

To state this another way, Bitcoin’s volatility and instability has derived from the engineered calm and stability of the fiat financial system pretty much since inception, but this is now changing, and as we can observe in the current meltdown in financial markets, which I have been predicting in my blog for the last five years… The waterfall collapse in the USD price of Bitcoin since last month is an ominous warning of what a regime change in the fiat currency system looks like, and when collateral and margins are desperately needed which fuels the movement out of and liquidation of stocks, bonds, gold, short volatility trades, risk parity trading, and yes even Bitcoin… And even though this is likely only temporary (like the gold and silver sell offs of 2007-2008) and that the MULTI TRILLION financial stimuli packages of all the world’s bankrupt central banks and governments will soon unleash on the world, is only the prelude to the Misesian Crack Up Boom and the Global Weimar Hyperinflation event, nevertheless does not refute the argument that Bitcoin is now going to be tested in a way which it never has before, and that we get to see how Bitcoin performs in a possibly extended period of fiat instability and volatility, and which will inevitably have a major influence on the liquid price of BTC/USD on all the world’s exchanges…

Therefore if the price predictions I have posted and that Plan B has brilliantly modelled is entirely based upon the past performance of Bitcoin, but connected to a financial system that far dwarfs it and in fact controls the world and that system for Bitcoin’s complete first three Halvening Cycles has perpetually inflated, has now reached its own Minsky Moment as stability creates the instability and the deflation in collateral values and their derivative values, then in my opinion it would be naive not to question if the ongoing collapse of fiat currencies worldwide will not change this stock 2 flow model in Bitcoin USD in Halvening Cycle No 4 (2020-2024), and No 5 (2024-2028)? It is only on the basis of the possible blow up in fiat currencies that I predict the breaking of Bitcoin’s stock 2 flow model in USD, and this can happen to the upside or the downside which I’ll discuss in both scenarios next…

Scenario No 1: BTC/USD S2F Model Under Hyperinflation

Hyperinflation is a very complex term with many moving parts that also in my opinion equates with a Debt Jubilee as the debt is inflated away with the purchasing power of the currency and revalues all other assets upwards, especially “real stuff” such as goods and services, property, equities, and obviously alternative currencies such as Gold and Bitcoin… The catastrophic collapse in purchasing power would also create chronic shortages of all other assets driving up all prices, and would unleash many decrees and controls over capital, including very possibly the “banning” of alternative currencies such as Bitcoin, otherwise stated as a ban on liquid exchanges and exchange which as we have witnessed in Communist China since their 2017 “ban”, has driven exchange underground and into over the counter exchanges and trading, through direct and virtually untraceable bank transfers or digital payment systems, or with physical cash which likewise leaves barely a trace… The knock on effect of this sanctioning of Bitcoin as I’ve described in many previous posts (especially in exchanges) would be the loss of surveillance and taxation capabilities over the fiat to Bitcoin interface, and driving it underground to the dark markets of anonymous non-KYC/AML exchanges and cash transfers on street corners, the Bitcoin fiat markets would become far more decentralized and illiquid, and the price swings would largely be eliminated as the price discovery system would shift from centralized exchange (and bitcoin repositories) to decentralized exchange…

I have also stated in past posts that I believe it highly unlikely that the world’s governments would unite with uniform legislation to outlaw Bitcoin, rather that Bitcoin would be more lightly or heavily regulated by National Governments to protect their monopolies over the Legal Tender Laws of their National Currencies, and why I also believe that Bitcoin as an uniform ledger and network operating in over two hundred individual countries simultaneously, would divide and co-opt national governments and their central banks… Irrespective of which national governments decree what regulations and where, I believe that this newfound instability within the global financial system that has barely even begun, will contribute to the rapid destabilization of the all the two hundred nation states of the world, and in my opinion could lead to the stabilization of Bitcoin, through a combination of more over the counter trading and Bitcoin for store of value and medium of exchange purposes, over the Bitcoin that has until now largely been around liquid exchange and speculative margin trading… The collapse of fiat money would in my opinion chaotically accelerate the adoption of Bitcoin worldwide irrespective of light or heavy regulations, and would make the Bitcoin USD stock2flow model irrelevant and probably obsolete as Bitcoin would just surge to the upside and likely just keep on going… If Bitcoin were ever to become the premier currency alternative to Fiat then I would imagine the BTC/USD boom and bust cycle would also be abolished as fiat would not be a safe haven of stability from which to escape Bitcoin’s pre-crisis volatility, fiat instability may well work to minimize instability within Bitcoin, as its price and value just kept appreciating creating a chronic and “stable” deflation… Under this catastrophic scenario for worldwide fiat currencies, I think you could throw practically any Bitcoin USD S2F model out the window, because the world would no longer be recognizable from the one that Bitcoin spent its first three halvening cycles operating within… All bets would be off…

Scenario No 2: The Return To The Gold Standard And Sound Money

You could also call this scenario a hyperinflation as the revaluation of gold is directly correlated with devaluation in fiat currencies, and Gold is a player that is largely ignored by both fiat currency religionists and Bitcoin religionists, which both tend to mock as an archaic and irrelevant pet rock… Alas, as I have written in all my posts I consider the past present and future of money and credit to be triangular, a symbiosis between gold, fiat and Bitcoin, and in which I believe gold will play the kingmaker… My trilogy of Gold and the Blockchain Posts concentrated on this very relationship, in my original post of August 2015, which I revisited in June 2017, on the future interaction of Gold and Bitcoin, and of the absolutely mind numbing potential of Bitcoin’s accounting network in distributing the price discovery mechanism of gold and silver worldwide, and the effects this would have on the localization of its supply chains, and true price discovery in a distributed market that cannot be rigged… I also predicted in the first two posts that no national government or central bank would voluntarily return to the gold standard, that would ensure the catastrophic acceleration of Gold and Bitcoin in a decentralized and largely censorship resistant manner, as they by-passed the fiat man in the middle and Bitcoin being the standard by which the gold industry would be measured and accounted from then on…

In my Gold And The Blockchain Redux: Trump, Q, The Gold Standard and Ending The Fed post published in October 2019, I discussed the possibilities of the US returning to a Gold Standard which I believe could be imminent, and for all those naysayers who say that a governmental return to sound money is impossible, I would implore you to take the time and read the post that I spent over eight months crafting… As this financial crisis is now accelerating the break up of Globalism and the Post Bretton Woods Petrodollar, as we can observe in the fresh Federal Reserve asset purchases and coming Helicopter Money to bail out the system, the collapsing price of crude oil (and the collateral underpinning the world reserve currency) and the controlled rise in the price of gold to near all time highs in the Dollar (read Federal Reserve Note), along with geo-political events since Trump’s election (most notably in Saudi Arabia) were pointing to the slow dismantling of the Petrodollar system as I extensively discussed in the post, and a return to A Gold Standard… I predicted that the likely path of Ending The Fed would be to strip it of its cherished “independence”, and by its “nationalization” and absorption into the US Treasury, like the “nationalization” of the Bank of England after World War II after the transfer of world reserve currency status to the Federal Reserve System as a private entity… In the event of Fed extermination and the revoking of the 1913 Act of Congress that brought it into being, money would revert in the US to the Constitution and issue by the Treasury, whether the gold is issued by coins for public circulation, the issue of gold certificates (paper money) or whether that gold would be held and scaled with a blockchain or other digital database, or sub-contracted out to retail banks and payment processing companies (as it currently the norm)…

The knock on effect of the US going back to the Gold Standard would be to force the rest of the world to return to some manner of sound currencies themselves, lest their unbacked national currencies chaotically hyperinflate, which would return us to an international gold standard that would eliminate the chronic trade surpluses and deficits built up during the last FIFTY years of globalism, and would force national treasuries and central banks to settle trade in a finitely produced commodity, and would mean implicitly paying for imports with exports, that protect domestic producers and manufacturers, producing national stability, internationally, and the opposite of global instability and fragility created by Globalism and the post Bretton Woods Eurodollar inter-bank accounting network…

The breakdown of globalism is the breakdown of the global supply chains that it spent its last FIFTY years creating and consolidating, an ever increasing leveraged financial house of cards, and de-globalization means the closing of borders, nationalization, and to force national self sufficiency in many key industries and life requirements that nations had hitherto forgotten, if this Coronavirus calamity and the effective lockdown of half the world’s population has brought anything to the fore, it is the fragility of the system of inter-connectedness and inter-depence that unhinged credit creation hath created… And in my October post, three months before talk of any virus, I had predicted that the unwind of the Eurodollar System and the collapse of Globalism and its supply chains could not come without a tremendous amount of short term pain and dislocations and the change of life as we know it in all aspects, and just six months later the world is going through a highly deflationary event for the global economy with chronic shortages of its ultimate collateral in the “Dollar”, while the re-nationalizing of economies and the flood of Western corporations that will be forced to repatriate jobs and production from the third world back to the West will be highly inflationary for the Federal Reserve Note, The Bank of England Pound and the Euro… The collapse of leverage and derivatives that we are currently seeing is also collapsing asset values, from stocks to bonds to real estate, and with national goverments madating the lockdowns of vast swathes of the productive but “non-essential” workforce, how are people to pay the taxes and repay the astronomical personal, household, and national debt that has been accumulated this last half century? There are already rumblings in the mainstream media about stimulus packages, and tax holidays, and debt forgiveness and even debt jubilees, which also ties in pretty conveniently in my opinion with the “global economic reset” that experts have been debating since the establishment of the Eurodollar system… This sure looks like a reset to me…

Which brings us to gold, the historic foundations of central banking and national governments, and an asset which they all nearly hold, and an asset that they spent the last fifty years since the unpegging of Gold at $35.00 per ounce trying to rig lower through their capture of the futures pricing markets for gold, to mask the devaluation of fiat currencies… Alas, de-globalization and the establishment of economic nationalism that would be the ultimate by-product of a gold backed international monetary system, would be highly inflationary for fiat, as is debt forgiveness and jubilees, the revaluation of gold explicitly means the devaluation of fiat currencies, and would revalue the collateral and underpinning of whatever financial system comes after… But where I would be looking for the first signs of gold revaluation would be the gold futures markets and in any strains in the COMEX and LBMA bullion banks that have a stranglehold over the so-called gold markets, and what do we find, again in the light of this so-called virus, is the breakdown of the futures markets and the disconnect between the physical deliverable metals between these exchanges… While there is a whole peanut gallery of experts to tell you that this is meaningless and that the gold is obviously just a delivery problem and is temporary, as I said the endgame for the Comex and LBMA market and the heirs of the London Gold Pool that collapsed just prior to the original uncoupling from gold in 1971, is the collapse of the leverage and margin of the Gold Futures Markets, setting up the recoupling to gold, and to which I will add no further as the logistics and mechanics of gold revaluation is a fascinating but lengthy subject in itself…

In the fiat currency system, all roads lead back to…

So for the main question: how would a sound money standard affect the adoption of Bitcoin and how would it effect upon the BTCUSD cycle if it was priced in a scarce and unforgeable US Dollar? The only really compelling answer I’ve seen about what could “kill” Bitcoin would be a return to sound money, which is let us not forget the reason why Bitcoin is here, as the genius brainchild of a pseudonymous programmer who had enough of the pillage of the central banks and the money printers, had the Times Headline of The British Government bank bailouts in the genesis block, has been spawned to mock and punish fiat currencies, banks and governments, and it would be the ultimate irony if one of the main accomplishments of Bitcoin were to force national fiat currencies to return to sound money, and which could diminish Bitcoin at least in the short and medium term due to the floor that gold would put under the purchasing power, savings, and standards of living and affordability of life for the general public that Bitcoin is competing for… Bitcoin’s compounding currency gains that have reigned in the age of central bank juicing, would be severely impacted under a regime of sound money where there is no requirement to hedge against fiat currency destruction, and this would be for Boomers AND Millennials as I described in my Bitcoin Adoption Demographics post, if the US and worldwide governments used gold to put a floor under the currency and the credibility of the banking system layered on top, then this would no doubt in my mind have to effect upon the desirability and adoption of Bitcoin and therefore the BTC/USD model…

While I argue that sound money would have an effect on Bitcoin indirectly, it would also in my opinion have a huge effect upon Bitcoin trading, and exchange trading… If you think about sound money as a chain upon credit creation and debt, then the vast amount of margin and leverage that is fuelling today’s Bitcoin trading will be gone, purged from the system, which will naturally effect upon margin requirements and leverage on Bitcoin’s exchanges, that will serve to tamp down upon Bitcoin’s “in-built” volatility and these waterfall collapses driven by derivative platforms such as Bitmex… The collapse of this fiat currency system will co-incide with a collapse in margin trading and leverage on Bitcoin exchanges, which moves us back to a more physical market so to speak, and of fully funded trading which cuts down on the fractional reserve trading of Bitcoin that drives volatility, manipulating newbies, and allowing whales to move around the price and which does nothing for mainstream adoption… Indeed, I would willingly trade today’s fiat USD/BTC model for a gold backed USD/BTC Bitcoin model in exchange for less swings with lower absolute highs but with lower absolute lows, cleaning up a lot of the more speculative elements which protects both HODLer and newbie to promote more broader adoption, which would drive more stable Bitcoin halving cycles…

In my last post on this return to sound money, I posed the question if this threatened Bitcoin’s long term future? And I answered no, because Bitcoin is far more than a currency, it is also a sovereign peer to peer network outside of any government censor, and even in the event of a gold standard would continue to serve as the escape valve for governmental and banking corruption and fraud, even in the event of a gold standard Bitcoin would provide an independent measure of value comparable to treasury and banking system, with any sudden surge in the value of Bitcoin indicating some fractional reserve fuckery within the gold standard, which would weaken that system while strengthening Bitcoin’s, which necessarily makes fractional reserve fuckery more risky for the bankers, and thus adds a second leash upon fraud and debasement, and a most priceless societal function worldwide…

And for the rabid and evangelical Bitcoiners out there who dismiss gold as a barbarous relic in the same vein as fiat currency cultists, it will be a wake up call to the enduring power of gold on the human psyche and a two and half thousand year lesson on humility and history in states and their gold and silver standards… I am currently in the middle of writing another post on credit and money and the lesson I’ll derive from that post is that credit and barter and ledgers is the product of a market under a developed legal framework, gold and silver coins and money is an invention of the state, of kings, emperors and rulers… In their historic fight against credit and the market with its most current and devastating iteration in Bitcoin and Distributed Ledger Technology, do you think that states will not fall back to their one remaining ace in the hole, in maintaining a collective control structure although stripped of its debt and derivative layers, and of monetizing a system (gold) that they can control, over monetizing a system that they cannot control? We shall find in the years ahead…

Conclusion

And so, here we are at the end of another four year halvening cycle… In my 2016 Halving post I eulogised on how developed Bitcoin had become since the 2012 Halving in code, exchanges, mining and community, and I called 2016 2012 on steroids… Well what can I say today? We have gone through the arduous Scaling Debate of 2016 and 2017, the UASF libertarians got their SegWit Activation and maintained control over Bitcoin’s future, of conservative blockchain upgrades and the radical development of second layer and off chain solutions, the development of mining and its complex multi month supply chains of energy, software and hardware, Bitcoin companies and projects that are building remarkable tools for Bitcoin privacy, security and payment solutions, the breadth of fiat currency exchanges and cash apps that in lockstep with national government legislation, are proliferating in all of the world’s two nations as banks are increasingly allowed to interact with and profit from Bitcoin… And for Bitcoin’s community, following some very public and acrimonious splits in the last four years, as the big blockers forked off into obscurity and a new streamlined (of original influencers) community plan the distributed and largely off chain future for scaling medium of exchange and unit of account layers, Bitcoin is still valued in single units on exchanges today as a store of value, but the new dictum post 2017 with the forays into second layers, is stacking sats with a satoshi representing a sub-divisionary unit of one hundred million, and the new and increasing unit for the medium of exchange and unit of account aspect, and will only be aided in adoption and use with the increasing value of Bitcoin as a store of value, for retail and institution investors going forward…

The scale and development of Bitcoin today compared to July 2016 in nearly every aspect is hard to quantify in words, but easy in monetary terms… When I wrote my original post back in 2016, Bitcoin USD had a market cap of $10,000,000,000 (Billion) and bitcoin was trading at around $650, while today Bitcoin USD has a market cap of $130,000,000,000 and trades at around $7,000, 13 X higher in market cap (stock) and 10 X higher in currency (flow), and which basically underpins my simplistic price predictions for 2024 and the next halving…  The far more detailed and visually striking models I presented were by Plan B, the first Bitcoin Quant to really develop Bitcoin’s stock 2 flow model both in terms of Bitcoin and for BTC/USD, and on a past is prologue basis, gives a far more accurate than chance prediction of where we are going in the future… I consider stock 2 flow modelling to be a burgeoning economic science and empirical method of quantifying and prediction Bitcoin’s price swings in fiat currencies, and therefore serves as an education tool for investors who are looking to get into the Bitcoin ecosystem, and the ongoing monitoring and updating of the stock 2 flow model will probably become a major academic and financial subject, as this applies to both retail and institutional investing, and I can see a lot of resources being plowed into this area of research as Bitcoin continues to halve and continues to grow…

The stability of the low interest rate low volatility post 2008 financial crisis is the backdrop into which Bitcoin has evolved the last decade, and it is only now (and channelling Minsky) that fiat stability has bred instability, as we are likely in the early stages of the next and even greatest economic crash in human history, and it is a time that is destined to break down previous and assumed correlations and patterns, and this I argue could well be true for the BTC/USD S2F Model, breakdowns in fiat currencies will break stock 2 flow models either massively and volatitively to the upside in case of catastrophic hyperinflation, or to the downside and far more controllably in the event of the voluntary return to gold and sound money states… I have made the case for both scenarios in this post, while my bias and gut instinct is increasingly plumping for the second scenario, which would be a completely new trading and investing environment for Bitcoin, an environment of sound money and low margin and leverage in Bitcoin exchange, which is a million miles from what we have today… Will the world’s states relinquish their powers over unlimited credit creation for limited money creation as the last ditch defence mechanism against their ultimate nemesis in Bitcoin?

See you in 2024 for some answers to these questions!!!

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Postscript: Audio podcast for this post.