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Here’s Why Bitcoin Will Lag its S2F Valuation By 5-10 Years, According to Willy Woo

Apr 24, 2024

Based on my analysis and understanding of the situation, I believe that Willy Woo’s prediction of Bitcoin (BTC) taking five to ten years to achieve its S2F valuation is a reasonable assessment given the current macroeconomic conditions. While the fourth halving has significantly reduced BTC’s inflation rate, it will take time for necessary infrastructure, regulations, trading instruments, and asset manager acceptance to come into place.

According to Bitcoin analyst Willy Woo’s interpretation, it could take as long as ten years for Bitcoin (BTC) to reach the estimated value based on the stock-to-flow (S2F) model.

Based on Woo’s Twitter post, achieving Bitcoin’s (BTC) valuation according to the Stock-to-Flow (S2F) model would necessitate favorable macroeconomic conditions. However, as I personally observe, the world doesn’t exhibit a swift response to such changes, suggesting a lengthy timeline for BTC to reach its projected value.

Bitcoin to Delay S2F Valuation

I’ve observed that following a fourth reduction in the Bitcoin network’s inflation rate, the analyst has made a prediction. This decrease was achieved by cutting in half the number of coins generated each day, thereby lowering the production rate.

It’s intriguing to consider whether Bitcoin (BTC), given that its inflation rate now falls below gold’s in the traditional finance arena, as stated by Woo, could eventually surpass gold’s market capitalization based on the S2F model’s prediction.

Based on current conditions, the development of sufficient custody structures, regulatory clarity, appropriate trading tools, and acceptance from asset managers for Bitcoin may be a lengthy process. Consequently, according to Woo’s perspective, Bitcoin might fall behind its Stock-to-Flow (S2F) valuation prediction by five to ten years.

S2F’s Bitcoin Prediction

I’ve observed PlanB, the innovative mind behind the S2F model, firmly holding onto his belief that Bitcoin (BTC) will surpass gold’s performance in due time. He is particularly convinced of this prediction given Bitcoin’s decreasing inflation rate following its halving event.

After the Bitcoin halving, the supply of new Bitcoins produced each day will be reduced by half, leading to an increase in its scarcity. PlanB, a well-known Bitcoin analyst, estimates that this reduction will result in a scarcity ratio (S2F) of 112 for Bitcoin. In comparison, gold currently has a scarcity ratio around 60. Bybit, a cryptocurrency exchange, recently reported that following the halving, Bitcoin will be twice as rare as gold, potentially making it more valuable than the precious metal.

I’ve noticed PlanB’s prediction that Bitcoin (BTC) will reach $100,000 by the end of this year and $300,000 by 2025. The latter price falls on the lower end of his estimated range between $250,000 and $1,000,000. These forecasts suggest that PlanB, the creator of the Stock-to-Flow model, believes Bitcoin could still climb higher within this current bull market cycle.

Bitcoin vs. Gold and Stocks

I’ve noticed that Woo’s perspective on the gold market has sparked some strong reactions among its members. To clarify my stance, I decided to present some figures comparing the annualized returns of bitcoin, gold, and stocks over the past four years.

I’ve noticed some intriguing differences in the performance of various investments over the past four years based on the data presented in the chart. Bitcoin, for instance, has delivered a remarkable return of 76%. In comparison, gold has seen more modest gains at 8.6%, while the S&P 500 stock index has outperformed both with a substantial increase of 17%.

“If you’re young, you can’t afford not to be invested in #Bitcoin,” Woo stated.

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2024-04-25 17:46