KEY POINTS

  • PlanB predicted Bitcoin at $98k in November
  • Huobi Research says PlanB's model was flawed
  • Says Fed's taper is pulling down BTC

As Bitcoin kept rising to its all-time high of nearly $69,000 on Nov. 9, the popular cryptocurrency seemed to be eerily following a path that PlanB had predicted for it — to rise to $98,000 in November, and $135,000 in December. But then, like one of those space rockets that zoom into the skies with so much hope and anxiety riding on them, Bitcoin's trajectory abruptly changed — downward.

The token is now down more than 16% from its all-time high.

PlanB is a pseudonymous Dutch investor with a cult following in the rarified world of crypto. He has 1.5 million Twitter followers, and claims some 25 years of experience in the financial markets. More importantly, he is said to have created the stock-to-flow (S2F) price prediction model, which is reported to have correctly predicted Bitcoin at $47,000 in August, and $43,000 in September. PlanB missed his October BTC target of $63,000 -- but it was still close enough.

As Bitcoin climbed to near $69,000 early November, it seemed like PlanB's $98,000 target for the month was still within reach. But after the recent slide, that seems like a lofty target -- BTC will have to rise, nay, vault a breathtaking 70% to hit that target.

Huobi Research says PlanB “only considered the monthly SF ratio of Bitcoin and historical Bitcoin price data when constructing the model, but ignored the impact of external macro changes on the market.”

U.S. Fed's announcement of taper is linked to Bitcoin's current slide, it said. The chart below shows Bitcoin's price during the previous taper by the Fed in 2014. It shows that as the tapering begins, Bitcoin starts to rise, but by the end of the tapering round, Bitcoin reaches an all-time high and drops. Huobi argues the current price movements are similar to what happened then.

Tapering vs BTC 2014 Fed's Tapering vs BTC in 2014 Photo: Huobi Research, Winds

“According to regular operation of the Fed’s monetary policy, after the end of taper, interest rate hikes will follow, which means that liquidity will shrink, bringing about a huge impact on various risk assets (BTC),” said the report.

According to Huobi Research, PlanB “only considered the monthly SF ratio of Bitcoin and historical Bitcoin price data when constructing the model, but ignored the impact of external macro changes on the market.”

PlanB, however, is sticking to their guns, saying in a Nov. 17 tweet that his prediction was not based on the S2F model, but on the "on-floor" model. 



While it would interesting to watch where Bitcoin would be at the end of the month, the controversy only serves to turn the spotlight on the lack of reliable models and predictions in the arcane world of cryptocurrency. 

Bitcoin logo Bitcoin is back above $62,000 and homing in on its record high Photo: AFP / Justin TALLIS