New Bitcoin Stock-to-Flow Chart Shows Bearish Periods Precede Halvings

Based on its hard-coded scarcity, and in line with its halvings, Bitcoin has risen dramatically in price over the years, giving the asset a high stock-to-flow ratio.

Crypto analyst PlanB wrote an article in March 2019, applying Bitcoin to the stock-to-flow model used in the traditional business world, previously applied to commodities such as gold and silver.

PlanB used this information to plot a Bitcoin chart depicting its stock-to-flow ratio and making a case for Bitcoin to reach a price tag of $55,000 after its 2020 halving.

According to Bitcoin's price - depicted as the red line on the chart - BTC price has reached comparatively higher separation above its median during bullish periods than the times it dropped below its median during bearish periods.

After its halvings in 2012 and 2016, Bitcoin followed the median upward trend but rode that trend mostly below the median line until large bull run spikes drove its price high above the median.

Prior to the 2012 and 2016 halvings, Bitcoin appears to have experienced bear market drops, spending time near the bottom of the dark blue deviation band.

Wolfram also developed this chart before Bitcoin's 42% spike on Oct. 25.Deviation chart inception.

While listening to Stephen Livera interview Trace Mayer on a podcast, Wolfram heard Mayer explain that "He buys and sells Bitcoin if it's one standard deviation below or above the predicted price," Wolfram said.

As Bitcoin moves toward its 2020 halving, one might wonder at what point such a graph would face invalidation.

Currently sitting near $9,300 at press time, Bitcoin still has quite a bit of ground to cover to reach its predicted $55,000 and $100,000 price targets.