If you've been an observer or participant in the Bitcoin sphere of Twitter, you probably know "PlanB", which is also called "100TrillionUSD". PlanB is an institutional investor in Europe who works under the table as a Bitcoin analyst , focusing on quantitative and technical analysis.

He is best known for formulating the Bitcoin Stock to Flow (S2F) model. The econometric model suggests that there is a relationship between the level of rarity of BTC and its price, and it predicts that over the next two years, the price of the cryptocurrency will drop from $ 55,000 to about $ 100,000.

This means that from current levels,   Bitcoin   could rally five to ten times.

What is important in the model is that it has a high R-squared value, which is a measure in statistical terms predicting how closely the actual data points correspond to the model predicting these points.

While many have called the S2F model pure hopium, it has recently gained credibility with a new analysis of rarity.

A model predicting $ 100,000 Bitcoin gains credibility 

The premise of the model is that whenever Bitcoin experiences a halving, the fair value of BTC sees an exponential increase.

Isolated, the model may seem somewhat irrational: how is Bitcoin supposed to increase by an order of magnitude (or two) in each market cycle without something breaking?

As one pseudonymous analyst explained, critics of the model overlook the exponential nature of technology adoption, whether it's the Internet or Bitcoin .

So far, Bitcoin has market penetration of around 10 million users, he postulated. (Estimates of this amount vary, but most place it in the range of 10 to 50 million.) This is important because the total addressable BTC market is approximately 2.2 billion people, referring to the estimated number people around the world with more than $ 10,000 in assets.

This means that around 0.5% of people who could theoretically adopt Bitcoin in the future have done so.

The adoption curve of modern technologies is exponential and faster than ever. Social media can become adopted by billions in a few years. TikTok has nearly one billion active users just three and a half years after its launch.

The cliché but precise graph below illustrates this exponential phenomenon well.

Although Bitcoin has moved more slowly than, say, social media or smartphones, its growth curve has undoubtedly been exponential.

Assuming this continues, the number of users of Bitcoin (which corresponds to the request of BTC ) will increase exponentially as the number of BTC extract de cro ITRA exponentially. This will create a phenomenon where BTC will become super rare, with any net marginal increase in demand for Bitcoin driving prices up in a disproportionate way.

"The figures for 'adjusted adoption scarcity' suggest a much more dramatic level of scarcity than Bitcoin's raw mining figures reveal at face value," writes the analyst.

Of course, that wasn't 100% accurate - it's unclear how macro factors could dramatically speed up or slow the adoption of Bitcoin and cryptocurrency, or if another blockchain could overtake the BTC .

But as the analyst explains:

“The intention was simply to take into account the way in which the adoption of the bell curve […] shows an increase of approximately 10 times the“ adjusted rarity ”per reward period, a little as we see in the S2F model.

There are still skeptics on the model

There are many skeptics of the model, despite the evidence that may justify it.

Alex Krüger, an economist who tracks cryptocurrency space closely, said the model is inherently flawed because Bitcoin scarcity is algorithmic and known in advance, not random, which means that it can technically be evaluated.

As previously reported by PassionCrypto , he wrote:

"People who use S2F to predict BTC might just as well use the cycles of the moon to predict BTC . […] The S2F analysis is interesting. But the S2F model is useless for predicting the price, because the underlying assumptions of the model are not fulfilled. Now and always. “

This was picked up by Hugo Nguyen, a crypto writer and resident of 2019 at Bitcoin development company Chaincode Labs. He estimated that the R squared of the model is derived from a “generous margin of error” and that the data on which the model is based are “pathetic”.